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The controversy over Adani’s US$ 500 million renewable energy project in Northern Sri Lanka, which now threatens to disrupt the newly forged good relations between Sri Lanka and India, is the result of a confluence of factors.
These are: Sri Lanka’s dependence on India for basics such as food, fuel and fertiliser; Colombo’s moral obligation to reciprocate New Delhi’s hegemony by accommodating the latter’s economic and geopolitical interests; and last but not least, issues raised by Sri Lankan nationalists, a powerful force, which is mainly based on the ingrained fear of Indian hegemony.
By the end of 2021, Sri Lanka has found itself in the abyss due to economic losses. This is the result of a poorly managed COVID-19 containment program, poor economic decisions and an inherited tendency to be imprudent in spending. When these policies led to unprecedented shortages in forex, food, fuel, fertilizers and medicines, and prices soared, only India rushed to the rescue. Other nations, including China, watched passively.
While China refused to restructure the debt payment regime, or change the loan terms, and asked Colombo to be prudent in financial management, Western countries said they would wait for the International Monetary Fund (IMF) to finalize its recovery scheme. Sri Lanka.
India has also not entered the fray mindlessly. It made Sri Lanka sign several pacts related to the security of the Indian Ocean before announcing its size, which is now worth more than US$ 3.5 billion. One of India’s expectations is that renewable energy projects in Mannar and Ponneryn in Northern Sri Lanka, close to Tamil Nadu, will be awarded to Adanis.
The project Adani plans to invest US $ 500 million. India views Tamil-dominated Northern Sri Lanka, just 36 km off its coast, as strategically important, due to China’s efforts to step up its economy. Previously, Sri Lanka was persuaded to cancel a Chinese project to set up a small power plant on the island of Nainativu, Delft or Neduntivu, and Analaitivu, located in Palk Bay, and give it to India instead.
However, the forex crisis, food and fuel, and the timely and generous assistance of India, cleared the way for a favorable decision on the Adanis’ project. Sri Lanka is in dire need of power, at one stage a 13-hour power cut had to be imposed due to fuel shortages in power plants. The Lankan government rushed approvals for projects circumventing the tendering process on grounds of necessity. Both President Gotabaya Rajapaksa and Prime Minister Ranil Wickremesinghe support the project as both want to retain India’s goodwill after China defends financial aid.
However, the entry of the controversial Adanis, coupled with the circumvention of the procedure, raised the hackles of Samagi Jana Balawegaya (SJB), Sri Lanka’s main opposition party, and radical Sinhala nationalist National Freedom Front (NFF). Opponents of Adanis were further angered when the government used its majority in Parliament to amend the Electricity Act to eliminate tender procedures for such key projects. SJB leaders said they were grateful to Indian Prime Minister Narendra Modi for the help he had given to Sri Lanka, but opposed him bringing in his controversial friend Adani through the back door.
The matter is further complicated by the fact that Ceylon Electricity Board Chairman MMCFernando told the Parliamentary Committee on Public Enterprises (COPE) that President Gotabaya Rajapaksa had said that the deal should be accepted because Indian Prime Minister Modi was under pressure. he. Surprised by Fernando’s statement, the President denied it and admitted only saying that it is difficult to get tenders for such big projects. Due to the president’s refusal, Fernando retracted his statement and resigned from his post.
Some like columnist Tudor Wijenayke think the government should not change the law but make the Adani project a government-to-government one, with Adanis named by the Indian government as the project’s executor.
The Union of Ceylon Electricity Board Engineers raised the issue of the price of electricity to be supplied by the Adanis plant. Although the government has said that it has yet to determine the price, it said it will be US 7.55 cents per kWh unit, while local producers are paid only the equivalent of US 5 cents. Moreover, Adanis must be paid in US dollars.
Opponents of the Adani project announced plans to demonstrate against the deal on June 16, intending to make it part of an ongoing anti-government campaign that began more than two months ago as the “Go Home Gota” movement.
Meanwhile, Sri Lankan nationalists (basically anti-India and anti-US) have jumped into the fray. National Freedom Front (NFF) leader and MP Wimal Weerawansa said India’s growing role in Sri Lanka should be examined against the backdrop of the IMF deliberately delaying much-needed aid. He also said that Sri Lanka should not be solely dependent on India. He added that foreign powers may find developments here conducive to their overall plans. QUAD and the West could use the “Right to Protect” policy to launch military operations against Sri Lanka.
Political observers say opposition groups, including some allies of the ruling party, are raising the issue to embarrass the government and build their own constituencies. SJB opposition is taking holes in every action of the government. And Sinhala or Sri Lankan nationalists are looking for opportunities to build their anti-India and anti-Western constituencies.
A Lankan official who did not want to be named said he thought the Adani deal was ill-timed. Coming soon after Indian aid began to flow, the deal gave the impression that the aid was primarily intended to secure New Delhi’s economic, political and strategic goals.
Reacting to the incident in Sri Lanka, the Adani Group said it was “disappointed” but remained confident the deal was safe. In a statement quoted by Indian media, the group said: “Our intention to invest in Sri Lanka is to meet the needs of our valued neighbors. has always been shared. We are clearly disappointed by the detraction that seems to have come about. The fact that the problem has been addressed by and within the Government of Sri Lanka”.
The assessment here in Colombo is that Sri Lanka will go through with the agreement, Opposition or No Opposition, because there is no choice.
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