On Friday, Sri Lanka awarded the construction of three solar and wind hybrid power generation facilities to an Indian company, cancelling a tender previously secured by a Chinese firm. This decision came after India raised objections to a Chinese energy project in northern Sri Lanka three years ago.
About the Project
On Friday, Sri Lanka's energy ministry revealed that the project has been revitalised and is now fully financed by an $11 million grant from the Indian government.
The Sri Lanka Sustainable Energy Authority, along with the Government of Sri Lanka and Indian company U-Solar Clean Energy Solutions (a renewable energy company headquartered in Bengaluru, India), signed a contract to construct "Hybrid Renewable Energy Systems" on Delft or Neduntheevu, Nainativu, and Analaitivu islands, situated off the northern coast of the Jaffna peninsula.
According to a statement from the Indian embassy, India's assistance "underscored the significance New Delhi attached to bilateral energy partnership”.
The trio of facilities will boast a total renewable energy capacity of 2,230 kilowatts and will be situated on islets close to the northern city of Jaffna, in proximity to India's southern coastline.
According to a press release from the Indian High Commission in Colombo, the project, intended to meet the energy requirements of the residents of the three islands, is being implemented with grant assistance from the Government of India. The hybrid project integrates multiple energy sources, including solar and wind, to maximise capacity.
In a social media post on platform ‘X’, Sri Lanka’s Power and Energy Minister Kanchana Wijesekara expressed gratitude to the Government of India, stating that the project will include 530 kW of wind power, 1,700 kW of solar power, 2,400 kWh of battery power, and a 2,500 kW standby diesel power system to be constructed on the three islands by U-SOLAR. The Bangalore-based company won the bid through a competitive process conducted by the Sri Lankan government for Indian firms. This initiative marks the third India-backed energy project in Sri Lanka’s north and east. The National Thermal Power Corporation is leading a solar project in the eastern Sampur town, while the Adani Group is establishing renewable energy projects in Mannar and Pooneryn in the north.
China’s project in Sri Lanka
The project, initially funded by an Asian Development Bank (ADB) loan, was paused two years ago because of India's concerns about China's participation in this strategically important island nation, which India considers to be within its sphere of influence, have persisted for some time.
The Sri Lankan Cabinet initially approved the Sinosoar-Etechwin Joint Venture from China to carry out renewable energy projects in the three islands. This decision came after the company won a competitive bid supported by the Asian Development Bank.
However, due to concerns about a Chinese project being close to India’s southern coastline, New Delhi proposed to implement the same project with a grant instead of a loan, which Sri Lanka accepted.
A Memorandum of Understanding (MoU) was signed in March 2022 during External Affairs Minister S. Jaishankar’s visit to Sri Lanka.
China expressed displeasure at the turn of events, with the Chinese Ambassador in Colombo criticizing Sri Lankan authorities for suspending the original projects for "unknown reasons" and sending the "wrong message" to potential investors.
As Sino Soar Hybrid Technology's energy project was suspended in Sri Lanka in December 2021, the company has since signed a deal to implement a similar project in the Maldives.
Economists Crisis in Sri Lanka
As Sri Lanka emerges from its most severe economic crisis since achieving independence from Britain in 1948, the rivalry between China and India for major infrastructure projects in the country has heightened.
Beijing occupies a significant role as Sri Lanka's primary bilateral creditor, accounting for roughly 10 percent of the island nation's $46 billion foreign debt during the government's default at the height of the crisis in 2022.
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