Eye on China, India inks SL deal for energy hub in Trincomalee

Among the important takeaways from Narendra Modi's fourth visit to Sri Lanka as prime minister was a tripartite agreement - also involving the UAE - to develop the coastal district of Trincomalee in the country's northeastern part as an energy hub. Announcing the project in the traditionally Tamil-majority area, which will include a multi-product pipeline, Modi said all Sri Lankans will benefit from it.

With its natural harbour and energy facilities, Trincomalee is of great strategic value for India as a strong presence there will also allow it to ramp up influence in the northeast Indian Ocean. The announcement follows Sri Lanka's securing of investments worth $3.7 billion from China's oil giant Sinopec, the largest foreign direct investment to date in the country, for an oil refinery in the southern Hambantota region during Lankan President Anura Dissanayake's visit to Beijing earlier this year. For India, it's imperative that China, which has in the past explored energy projects in islands off the Jaffna peninsula, is not allowed to make inroads into northern and eastern parts of the country.


India already has an agreement with Sri Lanka for developing some of the Trincomalee oil tank farms and India could develop more under the new MoU. Foreign secretary Vikram Misri said the proposed energy hub is an initiative designed to ensure Sri Lanka's energy security, provisioning of energy at affordable rates, and also to possibly contribute revenue for the country through export of energy. As a major strategic and energy partner, the UAE was an ideal partner for the first of its kind project in the region.

In line with their growing strategic convergence, India and the UAE had agreed in 2018 to jointly work on development projects in third countries.

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"And what the exact contours of the UAE role will be is something that is going to be elaborated once the B2B discussions kick off under this MoU," said Misri.

"The immediate next step that will be enabled by this framework MoU is the identification and the nomination of specific agencies and entities that could be govt entities or private sector entities or could be entities related to the govts themselves that will try and realise the business-to-business part of this agreement," added the official.