India will set up hybrid power ventures on three islands near Jaffna, effectively replacing the Chinese task cleared using Colombo closing year.
New Delhi has long been concerned about China’s growing influence in the region.
A $12 million project to build wind turbines on three small islands in the Palak Strait between southern India and Sri Lanka was awarded in 2019 to a Chinese company with funding from the Asian Development Bank (ADB).
But work never got off the ground after Indian protests over the Chinese effort closed off its coast, and work on the islands of Nainativu, Analativu and Delft was later canceled.
A joint announcement issued on Tuesday following a visit to Colombo by Indian External Affairs Minister S Jaishankar said a memorandum of understanding had been signed for the construction of the facilities.
An Indian official said he could not confirm whether the new settlement would be built on the same island slated for the Chinese project. Enterprise power sources and various small print were not available.
India considers Sri Lanka as its sphere of influence across the narrow Palk Strait off India’s southeast coast. The island state is also essential to China’s bold “Belt and Road” international infrastructure initiative in the middle of a vital sea route connecting East and West.
If the Chinese power plant works, it would put China next to the southern coast of India. Border disputes are already going on between India and China in various areas.
Jaishankar is also attending the BIMSTEC summit, a gathering of Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand, the international stand on the Bay of Bengal for financial cooperation.
India has signed an agreement to provide a maritime rescue coordination center and build a fishing harbor in Sri Lanka.
The deals come as Sri Lanka suffers its worst financial crisis in recent memory with shortages of medicine, gas and milk power and hours of power outages every day.
Sri Lanka approached India and China for help. India has secured a $1 billion deposit line to buy essentials, after an earlier $500 billion to buy fuel. China is considering a $2.5 billion financial aid request.
Infrastructure projects that are built using Chinese debt but don’t generate cash are blamed for the debt crisis. Sri Lanka’s foreign reserves are dwindling but foreign payments of $7 billion are due this year.
China was noncommittal to a request for debt restructuring.
Beijing has invested billions of dollars in building a seaport, airport, roads and a port city on reclaimed land near the port of Colombo that Sri Lankan authorities aspire to develop into a financial city.
The authorities had earlier scrapped a figure to allow China full ownership of the Colombo port city and instead gave it 62 hectares (153 acres) on a 99-year lease.
Separately, Sri Lanka has sought an additional $1 billion credit score line from India to import essential goods amid its worst economic crisis in decades, Reuters reported, citing two sources, as India’s foreign minister opened talks with its neighboring government.
The island nation is struggling to pay for basic imports of food and gas after foreign currency reserves fell by 70 percent in January 2020, leading to currency devaluation and efforts to seek aid from international creditors.