News
Projects signed ahead of Basil’s visit
Sri Lanka and India have sped ahead to sign agreements that give India greater access to Sri Lanka’s Trincomalee and Mannar area, days before Finance Minister Basil Rajapaksa is due in New Delhi to secure Colombo’s request for a US$1bn credit line.
The deals tied to the credit line were rushed through before new dates for Finance Minister Basil Rajapaksa’s twice-postponed visit to New Delhi were announced. Yesterday–a day after these agreements were signed–the Indian High Commission tweeted that Mr Rajapaksa would visit India next week and that “his visit
will consolidate ongoing efforts to further strengthen India-Sri Lanka economic partnership”.
The Finance Minister is going
to New Delhi to obtain the US$1bn loan for emergency food, fuel and medicine supplies.
One agreement entered into in Colombo on Friday is a Joint Venture and Shareholders’ Agreement (JVSHA) for the Trincomalee Power Company Ltd (TPCL) through which National Thermal Power Corporation (NTPC) Ltd from India and the Ceylon Electricity Board (CEB) will develop a 100MW solar power plant at Sampur in Trincomalee.
Finance Minister Rajapaksa and Power Minister Pavitra Wanniarachchi were present at the signing ceremony yesterday. The official announcement came from the Indian High Commission in Colombo, while the Sri Lankan Government made no statement on it.
While it was not announced, the CEB also signed a Memorandum of Understanding with India’s Adani Green Energy Ltd to develop a 500MW wind power project in Mannar. It said Adani would carry out a feasibility study in three months with support from the Sustainable Energy Authority (SEA) and the CEB.
The location is yet to be identified but it’s likely to be both onshore and offshore. In the medium to short-term, the Treasury, the Board of Investment (BOI), the CEB, the SEA and the Power Ministry will be involved. The investment is likely to be around US$500mn, authoritative sources said.
While law dictates that tenders must be called for power projects, the parties to the agreement have circumvented this by claiming that it is a Government-to-Government initiative by virtue of Adani having been “recommended” by the Indian administration.
The conglomerate’s footprint in Sri Lanka is now growing. It is already in a joint venture with the Sri Lanka Ports Authority and John Keells Holdings to develop and operate the West Container Terminal in the Colombo Port.
The Sampur JVSHA is an amended version of the JV agreement signed between the NTPC and the CEB in 2011 for setting up the Trincomalee Coal Power Plant to build and operate the now-cancelled Indian coal power plant in Sampur.
“With the termination of the Sampur coal power project in 2015, the Indian Government and the Sri Lankan Government agreed to have a solar power project on that land in Sampur,” CEB Chairman M.M.C. Ferdinando said. “It’s on that basis that they wanted to change the name of the entity to Trincomalee Power Company. The relationship between the two parties — the NTPC and the CEB — remains. The agreement covers changes to equity, debt and dividend.”
There will be 30 percent equity (50 percent each for the NTPC and the CEB) and 70 percent debt, for which Government guarantees will be given to raise funds in the capital market. “The characteristics of a coal power plant and its management are different to a solar power plant so those changes were also introduced,” Mr Ferdinando said.
“Signing of this JVSHA demonstrates yet again, India’s ability to respond to Sri Lanka’s priorities in a comprehensive and mutually beneficial manner,” the Indian High Commission said. “We will continue to encourage and facilitate the expedited and effective implementation of this project.”
“Our cooperation with Sri Lanka in this domain will only become stronger with the implementation of the US$ 100 million Line of Credit offered by India to Sri Lanka for development of solar power projects in Sri Lanka,” it added. “Similarly, there is significant interest among private sector on both sides for cooperation in renewable energy which is likely to increase in the coming years.”
Last week the Sunday Times exclusively reported that India has called for a road map from Sri Lanka on how it is going to overcome its economic crisis in the long term while also making a long list of economic cum strategic demands for implementation in the North and the East of Sri Lanka.
These demands involve a string of maritime security agreements that will strengthen India’s strategic interests, particularly around the Eastern Trincomalee harbour. These include Donier surveillance aircraft for the Sri Lanka Air Force and a ship repair dock for Sri Lanka Navy in Trincomalee
The Sunday Times also reported that one of the key pressure points from the Indian Government was to start a solar power project in Sampur. India also wants to enter into the renewable energy field in the Delft islet after it scuttled a Chinese company securing the project following an Asian Development Bank (ADB) tender procedure.
| Shopping list finalised; major share for private sector Sri Lanka has already finalised its shopping list for imports to be made under the credit line from India. The items include sugar, rice, dhal, onions and potatoes for a total value of US$ 150 million and pharmaceuticals to the value of US$ 115 million. In addition, raw material for the garment industry, animal feed, tyres, tubes and aluminium, cement and fertiliser have been included in the list prepared by the Trade Ministry. Finance and Trade Ministry sources said that 20 percent of the essential food items would be imported through the State Trading General Corporation while the private sector would be permitted to import 80 per cent of the stocks. | |
The best way to say that you found the home of your dreams is by finding it on Hitad.lk. We have listings for apartments for sale or rent in Sri Lanka, no matter what locale you're looking for! Whether you live in Colombo, Galle, Kandy, Matara, Jaffna and more - we've got them all!