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‘Chinese energy project in Sri Lanka’

Published: 15th Feb, 2021

‘Chinese energy project in Sri Lanka’


In a latest development, Sri Lanka cleared Chinese energy project, 50 km off Tamil Nadu.

About the Project

  • Under the project, China will set up hybrid wind and solar energy projects on three Sri Lankan islands off the northern Jaffna peninsula 45 km from Rameswaram in Tamil Nadu.
  • Project’s local partenr: The energy project’s local partner, the Ceylon Electricity Board.
  • Funding:The funds for the project are to come from the Asian Development Bank.

The concerned islands

  • The islands concerned are the Delft Island, Analativu and Nainativu.
    • Delft island, the largest of the three islands, is the closest to Rameswaram, which lies to the island’s south west.
  • Between the two is Kachchativu, the tiny island that India ceded to Sri Lanka in 1974.
  • The waters around these islands are an area of contest and rivalry between Tamil Nadu and Jaffna fishers. The matter has been on the bilateral agenda for decades.

Why Sri Lanka’s tilt towards China is concerning for India?

Two recent developments seem to have affected India’s relationship with Sri Lanka.

  • Sri Lanka recently pulled out of the East Container Terminal (ECT) deal with India and Japan at the Colombo port.
  • On the same day, the Central Bank of Sri Lanka (CBSL) returned US$400 million currency swap facility, which it availed in July 2020 to meet its emergency needs during the Covid19 induced lockdown.

East Container Terminal (ECT) deal

  • India, Japan and Sri Lanka had inked an agreement in 2019 to develop Colombo’s East Container Terminal.
  • The project, worth an estimated $500-$700 million, was a key marker for infrastructure investment in the island nation where Chinese projects are most prominent.  

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