Can Lanka throw caution to Indian geopolitical winds
In July last year, a joint statement issued by President Ranil Wickremesinghe and Indian Prime Minister Narendra Modi laid heavy emphasis on "connectivity" as the vision and hallmark of future bilateral relations.
The document categorised the areas in which such connectivity would be forged: maritime, air, power and energy, trade, economic and financial, and people-to-people. Among other things, the two governments signed a memorandum of understanding for cooperation in renewable energy (RE). That ball is now rolling fast.
This week, the first meeting in Colombo of the India-Sri Lanka Joint Working Group on Renewable Energy was attended by the Secretary to India’s New and Renewable Energy Ministry alongside 17 members from the Confederation of Indian Industries representing major RE companies.
Earlier, India's Deputy National Security Adviser was in Colombo, and last month, Power and Energy Minister Kanchana Wijesekera was in India. And apart from other visits to Colombo by relevant Indian officials, a Sri Lankan team led by President Wickremesinghe’s Chief-of-Staff and National Security Adviser is expected in New Delhi soon.
Plans for bilateral power and energy cooperation aren’t new. Discussions for an Indian-built coal power plant started in the mid2000s. Other ideas, including oil and gas projects, have been bandied about, and now RE projects, but none has reached fruition. India is getting irritated by the delays. And it is not all to do with energy cooperation; it’s geopolitics too.
Given the proximity of India and Sri Lanka, it makes sense, energy-wise, for there to be connectivity in this sector. The Asian Development Bank in the 1990s even proposed for South Asia a system akin to the European super grid—a series of interconnected localised grids that would allow energy to be traded across borders. Today, Nepal, Bhutan and Bangladesh have connectivity with India, but not Sri Lanka.
India has repeatedly pointed out how it rushed to Sri Lanka’s rescue when the economy crashed in 2022 and nobody else came forward. This reminder makes its way into joint statements, forums, speeches, conversations and basic geopolitical PR spindoctoring. Colombo has consistently expressed gratitude.
With a vastly under-exploited RE sector in Sri Lanka and an eye on the geography, India has identified Mannar for onshore and offshore wind projects. How will these be packaged? While the Mannar wind power project is window-dressed as a government-togovernment initiative, it is very much the typical Chinese model— a government-sponsored private-sector project with heavy geopolitical undertones.
The process is important. And so is pricing. The Indian-Adani project is expected to sell electricity to Sri Lanka at a relatively high rate after accounting for new infrastructure such as transmission lines and country risk, which entails a high premium.
A problem Sri Lanka has consistently had while negotiating foreign agreements is that talks are not based on any national strategy or plan. In the case of Adani, there was no mechanism to figure out the reasonable cost for the project. While donor assistance had been available for a foreign consultant (an expert was even identified) who would make that assessment, Sri Lanka chose not to use it. There was no “price discovery”—nobody to calculate the plant factor, capital cost, interest rate, risk premiums, etc.
Discussions on energy exports are centred on Indian entities using Sri Lanka’s RE resources to produce power. And yet, this country also needs to consider its own energy deficit. As the economy recovers—and the Port City, vehicle and railway electrification, to name a few, take off—demand will grow.
The question then will be whether Sri Lanka will only have lowyield RE resources to bank on. Secondly, how much will these investors pay Sri Lanka? Again, strong, informed, and educated negotiations are crucial. Investors make money. India is looking for a geopolitical foothold. And if those who represent Sri Lanka’s interests are not skilful and savvy enough, at least as much as the Indian side seems to be in getting the best deal, connectivity will only be a one-way street.
Is this, therefore, an equal partnership? When there is the ongoing example of how Sri Lanka is given the run-around—and the cold shoulder—over the fishing issue between both countries and Sri Lanka’s pleas to stop the poaching by Indian fishermen fall on deaf ears in New Delhi, there is every reason to worry.