Adani to invest in Sri Lanka to build power plants to counter China

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New Delhi: A small group of fishermen operate in the shallow coastal waters of Pooneryn in northern Sri Lanka, a destitute and lonely region not far from the southernmost tip of India. It is where Indian billionaire Gautam Adani, who has just overtaken Jeff Bezos as Asia’s richest man, is proposing to build renewable energy projects, placing him in the middle of a global political conflict.

A key battleground because of its location on major global sea lanes and its ability to fuel New Delhi’s concern about being encircled by its Asian rival, Sri Lanka is currently experiencing its worst economic crisis since independence from Britain in 1948. As a result, India has re-engaged and is trying to tip the scales in a strategic struggle with China on the island.

Adani, a staunch supporter of Indian Prime Minister Narendra Modi, is at the forefront of these initiatives. His group has consistently refuted accusations that it signed tourism deals with ports and energy that were closely linked to New Delhi’s interests, claiming the investments met Sri Lanka’s needs. However, some Sri Lankan lawmakers have made this accusation.

Adani, who is worth $137 billion, heads a vast empire that includes ports, coal mines and electricity production and distribution. Although Adani derives most of its wealth from India, it has gradually signed more international deals and told shareholders in July that it is seeking “broader expansion” outside India with “several” foreign governments approaching to his conglomerate to build his infrastructure.

Adani’s apparent closeness to the Modi government and these actions have led to speculation that the businessman could provide funding for India’s opposition to China’s Belt and Road infrastructure initiative aims to strengthen Beijing’s influence in key nations and on the international stage.

“In countries where the Indian government has better relations than the Chinese government, Adani could be successful,” said Akhil Ramesh, a resident fellow at the Pacific Forum research institute in Honolulu.

Although India lacks the financial power of its neighbor, Adani’s businesses in nations such as Israel and Sri Lanka put Chinese state-owned enterprises in competition with them.

And the most extreme manifestation of this tension is in Sri Lanka. Several Indian and Sri Lankan officials told Bloomberg News that Adani’s investments there support the Modi administration’s goals on the teardrop island, similar to how its port companies, energy and cement align with national economic priorities. Adani has frequently refuted claims that the Modi administration gives its companies preferential treatment.

A team from the Adani Group, which aims to invest $70 billion in renewable energy, visited northern Sri Lanka shortly after this meeting. Since the country’s 26-year civil war ended in 2009, the region has been severely underinvested.

According to multiple sources with direct knowledge of the situation, the visit appeared to be a turning point, as not long after, the Rajapaksa administration halted Chinese solar projects on the Palk Strait islands between India and Sri Lanka because of New Delhi’s security concerns. The completion of the solar projects was subsequently verified on social media by the Chinese Embassy in Colombo.

Just months after signing a $750 million deal for the port of Colombo, Adani highlighted the “strong ties” between the two countries in a meeting with then Sri Lankan President Gotabaya Rajapaksa in October ‘last year. It was a rare case of Indian infrastructure investment in Sri Lanka after Colombo had earlier turned to Beijing, which through the Belt and Road has sponsored everything from ports to roads and spent lavishly on projects fueled by debt.

According to local media sources, Adani secretly signed deals to develop 500 megawatts of renewable energy projects in Pooneryn and Mannar, two more northern districts near India. This information was later corroborated by a tweet from Sri Lanka’s Minister of Power, Kanchana Wijesekera.

India “is concerned about China’s access to the Indian Ocean and being encircled by Chinese-friendly regimes in Pakistan, Sri Lanka and Bangladesh,” said Katharine Adeney, a professor and expert on southern politics. Asia at the University of Nottingham. Adani’s replacement of China’s solar power projects represents “a strategic move and one that we are likely to see more of,” he said.

Both the Adani Group and spokesmen for India’s foreign ministry declined to comment. Requests for comment from Sri Lanka’s president and China’s ambassador in Colombo were not returned. Wijesekera, the power minister, also did not return Bloomberg’s messages.

The Indian billionaire has even begun to openly criticize China, claiming in September at a conference in Singapore that the Belt and Road was meeting “opposition” and that China was becoming “increasingly isolated.”



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