India and China are currently locked in a struggle over a wind cum solar energy project in three islands off the Jaffna Peninsula in North Sri Lanka which are very near India.
Though it is only a small US$ 12 million project, the Chinese interest in it and Indian objections to Chinese involvement in it, are symptomatic of a deeper geo-political conflict between the two Asian powers. The issue is influence over the strategically important North Sri Lanka, which, at one point, is only 27 km from India.
On January 18, 2021, the Sri Lankan cabinet approved a proposal to involve the Chinese joint venture company Sino Soar-Etechwin to install “hybrid renewable energy systems” in Nainativu, Delft (or Neduntivu), and Analaitivu, located in the Palk Bay. The islands are connected to the Jaffna peninsula by a limited ferry service managed mostly by the Sri Lankan Navy. They have been getting electricity from small diesel plants, but the Lankan government has been keen on enhancing the power supply to the 2718 households in the islands by using the cheaper wind and solar energy.
The Sino Soar company’s Project Manager, Paul Cao, said in a statement published in the Islanddaily on December 4, that the project was based on a loan proposal submitted to the Asian Development Bank (ADB) by the previous government of Sri Lanka in September 2015. The project was to build a wind-photovoltaic-energy storage hybrid power generation system to replace the diesel generator power supply, increase electricity supply, make full use of renewable energy to reduce the cost of power generation, and provide green, continuous and stable power.
According to Paul Cao, in the implementation of the contract, local construction management and project implementation were to be subcontracted to Sri Lankan companies. There would be no Chinese laborers. In the context of the COVID-19 epidemic, this project was meant to create employment for Sri Lankans.
Sino Soar, as the contractor and specialist in the mini-grid field, was to be the guarantor of the project. The main facilities of the plant were to be supplied from China and the majority of construction materials were to be procured locally in Sri Lanka, Cao said.
Further, the project was to be funded by the Asian Development Bank (ADB) and therefore every step had been in accordance with international bidding procedures, open and transparent, he added.
Indian Objection
However, in early February, India objected to the project on security grounds. India pointed out that the Chinese project would be located too close to India, a location from where Chinese agents could monitor India from closer quarters than before.
India offered to fund the US$ 12 million project with a grant and also execute it. Seeing the benefits of the Indian proposal (a grant and not an ADB loan as in the Chinese case), the then Minister of Power, Dullas Allahaperuma,accepted the Indian proposal and promised to change the earlier decision. But on February 16, the new Energy Minister Udaya Gammanpila said that there was no change in the decision to award the contract to the Chinese company.
However, perhaps out of an unwillingness to antagonize neighbor India, the project was put in cold storage if not cancelled. The Chinese too did not pursue their case perhaps to avoid embarrassing the Sri Lankan government from which it had gained a lot of mega projects and from which it was to get another contract to supply cranes and do civil works in the Eastern Container Terminal in Colombo port.
Chinese Rekindle Issue
But the standstill was upset by a recent press release from the Chinese embassy in Colombo rekindling the controversy. While reporting on Sino Solar Technologies getting a contract to set up power plants in 12 islands in the Maldives (despite India’s greater influence over the government there) the Chinese embassy in Colombo reminded readers that Sino Solar had earlier been denied a project in North Sri Lanka at the intervention of a “third party” (meaning but not naming India).
Within days, the local and international (mostly Indian) media put out a story that China has “withdrawn” from the North Lankan islands project due to Indian pressure.
Sino Soar Firm on Project
In a bid to correct the impression that it has opted out of the project, Sino Soar Technologies’ Project Manager Paul Cao issued a press release on Friday saying that the company is still in the project.
“SINOSOAR was the pre-winning bidder for the three islands mini-grid project in northern Sri Lanka. In the last couple of days, we noticed some misrepresented reports in some local media, claiming that our company took the initiative to suspend the project. This misinformation is against the truth and has violated the legitimate rights and interests of our company and affected the progress of the project. At present, the project is still under review process, and the progress of the project is unfortunately slow due to the interference of some third-party factors as far as we learned,” Cao said.
He pointed out that the project was funded by the Asian Development Bank in full accordance with international bidding procedures. Every step was open and transparent, he added.
“Our company will strictly abide by the laws and regulations of Sri Lanka and the relevant requirements of the Asian Development Bank and Ceylon Electricity Board,” Cao said and went to warn: “At the same time, we firmly oppose any unwarranted interference by any third parties without legal and factual basis. Our company hopes that GOSL will strictly follow the international bidding procedures to implement the project, and protect the legitimate rights of the contractor, as well as its own seriousness and international reputation.”
Possibilities
Cao’s warning has put the Sri Lankan government on the horns of a dilemma. On the one hand, the Chinese company might take punitive action and the Chinese government might close the financial tap squeezing Sri Lanka further. On the other hand, showing insensitivity to India’s security concerns can have dangerous consequences for Sri Lanka, given India’s historical hold over the country.
Be that as it may, for the foreseeable future, it is very unlikely that Sino Soar or any other Chinese company will get this project or any other project in North Sri Lanka given India’s strenuous and on-going efforts to draw Sri Lanka into its security net.
Chances of a Chinese breakthrough look more dim after Lankan Finance Minister Basil Rajapaksa’s recent visit to New Delhi during which he met Indian Ministers and the National Security Advisor Ajit Doval, who enjoys cabinet rank in India. Doval as well as External Affairs Minister S.Jaishankar (with whom Rajapaksa had two meetings) would no doubt have told him about India’s strategic interest in North Sri Lanka.
India’s Interest in North Lanka
India’s strategic interest in North Lanka is based on several factors. Firstly, North Sri Lanka is the region which is geographically the closest to India. The Jaffna islands are a bare 27 to 30 kms from the Tamil Nadu coast. Secondly, the Tamil-speaking majority in the North has been of particular interest to India because of its historical, ethnic, linguistic and religious links with the Indian state of Tamil Nadu. Thirdly, India has, since the 1980s, upheld the Lankan Tamils’ struggle for provincial autonomy though not for outright independence. It had sent its military to enforce the 1987 India-Sri Lanka Accord to enforce its autonomy scheme.
After the end of the war against the Tamil militant LTTE in 2009 and Sri Lanka’s inviting China to provide massive assistance for post-war infrastructure development, India began to face another kind of problem, namely, Sri Lanka’s getting into the Chinese economic cum political cum strategic orbit. India was sure that China’s aim was to weaken India by making its neighbors de-link themselves from India economically, politically and strategically.
India has been particularly disturbed about China’s bid to penetrate the North (and also the Tamil-speaking Eastern Province) with development projects. It is no secret that China is keen on penetrating the North to challenge India’s claim to a monopoly there. This is done as part of Beijing’s over-arching anti-India policy. Knowing this, India is sensitive to Beijing’ every little move in North Sri Lanka.Even a small private sector joint venture to set up a sea cucumber farm in the North was a source of worry to India, at least as portrayed in the media.
India’s Advantage
But India has a great advantage over China in the Lankan North. The Tamils dislike China,seeing it as pro-government. The Tamils believe that China will never support their demand for political autonomy or human rights. India, on the other hand, has consistently supported their demand for autonomy at least. India has consistently taken up this cause with successive Sri Lankan governments in Colombo and used the UN Human Rights Council to press theTamil case.
The Tamils also know that, as in the past, if there is any anti-Tamil violence in Sri Lanka, the only country they can take refuge in will be India. This is despite the fact that the Tamils supported the LTTE when it took on the Indian military between October 1987 and March 1990.
The Tamils in the islands of Jaffna have two other objections to the location of Chinese projects amidst them. According to media reports some islanders expressed fears about environmental damage and others feared getting involved in a China-India conflict which is expected to sharpen and widen in the coming years.
When it comes to foreign investments in their areas, the Tamils would prefer India-funded projects or Indian investments.
END
