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Don’t cancel projects suddenly, Chinese Envoy tells Sri Lanka

22 Mar 2022

  • Refers to Northern energy projects halted after India’s concerns 
  • China considering Sri Lanka’s $ 2.5 bn loan and credit line request 
BY Asiri Fernando  Ambassador to China in Sri Lanka Qi Zhenhong has urged Sri Lanka not to suddenly cancel projects which are awarded through a transparent bidding process, referring to the cancellation of an energy project awarded to China in the Northern Province last year, as it erodes confidence in Sri Lanka among Chinese investors. Ambassador Zhenhong was responding to a question about what Sri Lanka can do to improve investor confidence, especially from Chinese investors, at a media briefing held yesterday (21) in Colombo.  In January 2021, the Sri Lankan Cabinet approved a proposal to involve Sino Soar Hybrid Technology in China to install “hybrid renewable energy systems” in Nainativu, Delft or Neduntheevu, and Analaitivu, located in the Palk Bay. However, Sri Lanka cancelled the project in late 2021 after objections from New Delhi, India, citing security concerns and the proximity of Chinese projects to the Tamil Nadu coast. The Times of India reported at the time that India had worked for almost a year to “get China off” the projects in Sri Lanka.  The Chinese Embassy in Sri Lanka announced in a Tweet in early December that the hybrid energy project had been suspended, adding that the same company had then inked a contract with the Maldivian Government to establish solar power plants at 12 Maldivian islands. Chinese sources and experts then criticised India for meddling in Chinese companies’ energy projects in Sri Lanka, saying that New Delhi’s interference poses a serious threat to development and prosperity in South Asian countries such as Sri Lanka. China-based Global Times quoted an unnamed source close to the company as saying: “It is ridiculous that India uses security reasons to meddle in the project. The Sri Lankan project is small, supplying electricity to villages on three small islands. Since the islands and the main territory of Sri Lanka are separated by the sea, it is very likely that the power grid will not be connected to other places in Sri Lanka.”  A number of Northern politicians, including several from the Tamil National Alliance (TNA) have voiced their opposition to Chinese projects in the Northern Province. However, Ambassador Zhenhong said yesterday that he received positive feedback from the Northern community during his recent visit to the North and highlighted several successful Chinese projects in the North involving fishing and sea cucumber farming. He also said that more foreign direct investments (FDIs) to the Colombo Port City and Colombo International Financial Centre will come through this year. Meanwhile, Ambassador Zhenhong said that the Government of China is considering a request by Sri Lanka for a $ 1 billion loan and a $ 1.5 billion buyers’ credit line, the latter for goods and services which are imported from China. Earlier this month, Sri Lankan High Commissioner to Beijing Dr. Palitha Kohona told The Sunday Morning that Sri Lanka had sought a credit line to import essential items, raw materials for exports, and construction material from China. Last week Sri Lanka secured a $ 1 billion Indian credit line to buy urgently needed food and medicine from India, during a visit to India by Finance Minister Basil Rajapaksa. When questioned about the progress on restructuring Sri Lanka’s debt to China, a request made by President Gotabaya Rajapaksa during Chinese Foreign Minister Wang Yi’s visit in January, Ambassador Zhenhong said: “China and Sri Lanka are keeping close negotiations on economic and financial co-operation. Our aim is to help our Sri Lankan friends to overcome the current difficulties that they are facing. We have done much to help and will continue to do so.”  Ambassador Zhenhong added that China was keen on moving forward with the stalled Free Trade Agreement (FTA) between the two countries. Addressing concerns about the inequalities between the two markets, he said that China would not exploit Sri Lanka through the FTA, adding that any concerns could be discussed at the upcoming negotiations. The China-Sri Lanka FTA negotiations had completed six rounds of talks before it stalled a few years ago. Responding to a media query regarding the concerns surrounding the proposed FTA, Zhenhong pointed out that China has entered into a FTA with Cambodia which had a smaller economy than Sri Lanka. He added that even though Cambodia had a smaller economy and industrial base, the FTA with China had benefited it.

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