Sri Lanka Signs New Contract With Bengaluru Company; Scraps Solar-Wind Energy Deal With China

To bolster Sri Lanka's renewable energy capabilities, the island nation has terminated its contract with a Chinese firm and awarded the construction of three solar and wind hybrid power generation facilities to Indian company U-Solar. The decision, announced on Friday, marks a strategic shift that aligns with India's commitment to fostering energy partnerships in the region.

Originally financed by an Asian Development Bank (ADB) loan, the project now stands backed by an $11 million grant from the Indian government. This development underscores the growing scepticism in India regarding increasing Chinese involvement in neighbouring states, prompting New Delhi to proactively counter this trend with its own initiatives.

The contract with the Chinese company was temporarily halted two years ago after the Indian government raised concerns, reflecting a broader pattern of India seeking to mitigate Chinese influence in its neighbouring countries. U-Solar, headquartered in Bengaluru, will now lead the construction.

The three solar and wind hybrid power facilities will boast a combined renewable energy capacity of 2,230 kilowatts and will be strategically located on islets near the northern city of Jaffna, in close proximity to India's southern coast. The unique hybrid project aims to optimize capacities by harnessing various forms of energy, blending both solar and wind power sources.

A press release from the Indian High Commission in Colombo highlighted the significance of the project, emphasizing India's commitment to promoting sustainable energy solutions in the region. The statement noted that the partnership between India and Sri Lanka in this venture underscored the importance New Delhi attached to fostering bilateral energy cooperation.

This marks the third major Indian-backed energy project in Sri Lanka. The National Thermal Power Corporation is currently leading a solar venture in the eastern Sampur town, while the Adani Group is actively involved in setting up renewable energy projects in Mannar and Pooneryn in the north. These initiatives reflect the collaborative efforts between the two nations to strengthen their energy ties and contribute to a greener future.

The Memorandum of Understanding (MoU) for the third energy project was signed in March 2022 during the visit of India's Foreign Minister S Jaishankar to Sri Lanka. This highlights the longstanding commitment of both nations to work together towards sustainable and environmentally friendly solutions.

India's growing influence in the region is further evident in Sri Lanka's recent decision to impose a one-year ban on Chinese "research vessels" from entering its Exclusive Economic Zone (EEZ). The move came after India raised objections, amid speculations that these vessels were potentially tracking strategic military and naval assets under the guise of research activities.

This ban not only represents a significant diplomatic victory for India but also serves as a setback for China in the region. The strategic alignment between India and Sri Lanka on both the energy and security fronts reinforces India's role as a key player in shaping the geopolitical landscape in South Asia.