Why foreign investors face hostile responses in Sri Lanka


As the country’s energy crisis reaches a boiling point, Sri Lankans have warned the government not to offer foreign investors like the Adani Group the mega renewable energy project in Mannar, which will have the capacity to supply 500MW to the national grid. Such backlash is common when successive governments offer unsolicited proposals to foreign investors, which is an open secret. However, India has consistently been singled out for unsolicited proposals in comparison to Chinese projects that have been hostile, opaque, and shrouded in secrecy.

On Thursday (16) a protest was staged opposite Majestic City Bambalapitiya opposing the alleged influence of Indian giant Adani Group over the Sri Lankan energy sector.

Many Government to Government (G to G) projects are not disclosed, and even under the Right to Information Act, such G to G information cannot be obtained because they cannot reveal the “details” of foreign investors. G to G projects in Sri Lanka are not selected through a competitive bidding process. This has benefited both successive governments and the investors involved. Huge tax breaks for investments in Sri Lanka have rocked the country’s economy, and concessions and unsolicited bribes frequently come in between when government top officials and politicians meet investors’ needs.

But the good practice is that when State land is offered to international investors it has to be through a tender process and if they are private persons then none need to worry about tenders.

The Norochcholai Power Plant, for example, was a G to G project between Sri Lanka and China (any project involving China is a Chinese government project). Ceylon Today published on Norochcholai last week, which will be offline for the next two months. The Ceylon Electricity Board (CEB) is well-known for dispatching Chinese engineers to repair the coal plant whenever it experiences major operational problems. This is may be part of the MoU. It was former CEB Chairman Vijitha Herath in an interview with Ceylon Today last year who said that Chinese engineers come to Sri Lanka when a major breakdown occurs. He claimed that Sri Lankan engineers are incapable of performing all tasks and that the know-how belongs to the Chinese who built the power plant.

Chinese Embassy tweet

The Chinese Embassy on the other hand said Norochcholai was built, developed and handed over to Sri Lanka and referring it to the Chinese makes no sense. However, the breakdown operations are still handled by the Chinese engineers, so still they have a say over the operations of the coal power plant undoubtedly.

The Chinese Embassy tweeted in response to the news that Norochcholai would shut down for two months, saying that Norochcholai provides 40 per cent power to the national grid; a most reliable and economic source under current fuel crisis. The Chinese also said that Norochcholai is CEB’s ‘biggest goose that laid golden egg’ funded by buyer’s credit loan with concessional rate. The Embassy further noted that maintenance is long overdue.

Also, last week all hell broke loose when former Chairman of the CEB M.C.C. Ferdinando, alleged that President Gotabaya Rajapaksa had told him personally on 24 November last year that Indian Prime Minister Narendra Modi had pressured the President to hand over the 500-megawatt wind power project in the Mannar District to Indian business tycoon Gautam Adani. The Adani Group responded to the Indian media that they were “disappointed” to hear such news.

The Indian TV channel NDTV quoted that Adani Group’ as saying, “Our investment in Sri Lanka is intended to meet the needs of a valuable neighbour. As a responsible corporation, we see this as an important part of the long-standing partnership between our two countries. The detraction that appears to have occurred has clearly disappointed us. The fact is that the Sri Lankan government has already addressed the issue and within its ranks”.

Ferdinando’s controversial statement to the parliamentary panel sparked outrage across the Indian Ocean region. The chairman eventually retracted his statement offering his unconditional apology and that he was emotional while facing the panel when he had said so.  President Rajapaksa categorically denied Ferdinando’s claim and finally, Ferdinando tendered his resignation. 

“Regarding a statement made by the CEB Chairman at a COPE committee hearing on the awarding of a wind power project in Mannar, I categorically deny authorisation to award this project to any specific person or entity. I trust responsible communication in this regard will follow,” the President said.

Over these controversial remarks, Congress leader Rahul Gandhi tweeted, “BJP’s cronyism has now crossed Palk Strait and moved into Sri Lanka.”

But what is going viral on social media is that Ferdinando while he was the Energy Ministry Secretary prior to 20215 he purchased four properties in Victoria, Australia and deeds under his son’s name. It is alleged that he had purchased these properties in 2008 when the Norochcholai Coal Power Project commenced. The Power and Energy Minister at that time was Mahindananda Aluthgamage and his commission alone was USD 24.5 million and then the FCID had all the evidence of the accounts in Singapore and under whose names they were. Unfortunately, then Prime Minister Ranil Wickremesinghe together with his Law and Order Minister Sagala and the IGP dragged these cases  until they were toppled by the Rajapaksas in 2019.

Ferdinando was named as a suspect in the infamous Norochcholai Lakvijaya coal case, and he requested that the Court lift the travel restrictions imposed on him so that he could visit his family in Australia. He left Sri Lanka on the night of the Presidential Elections on 8 January 2015, in connection with the investigations into the import of coal for the Norochcholai coal power plant. Four directors of Lanka Coal Company (Private) Ltd were arrested on charges of criminal breach of trust, resulting in a loss of Rs 1,536 million to the CEB when importing coal for the Norochcholai Lakvijaya coal power plant. Despite all these accusations, Ferdinando was brought back to the energy sector last year.

Private man Adani doing State owned RE in SL is controversial

India, on the other hand, has received far more criticism than China, owing to the ethno connections between India and Sri Lanka, which share traditions and languages on both sides, particularly the Tamils. The Tamil Nadu factor and the Sinhalese’s hatred of the Tamil Tigers-Tamil Nadu connection is a deep-seated hatred. This has been the key for China’s support in all successive Sri Lankan governments at the United Nations Human Rights Council, where China stands by the Sri Lankan majority sentiments on disapproving all alleged human rights violations, a card that the Indian Government wisely plays as it deals with the Tamil Nadu people.

In comparison to China’s connections, India’s responsibilities to Sri Lanka in terms of politics, ethno-linkage, religion and Tamil welfare are critical. However, China has openly meddled in Sri Lankan politics. China and Sri Lanka mutually support each other on the international stage. China has criticised the UN for interfering in Sri Lanka’s domestic affairs. Sri Lanka has warned the UN not to meddle in China’s domestic affairs. China also fought back with the Sri Lankan government on issues relating to the organic fertiliser fiasco, as well as the three northern renewable energy projects that were taken away from them. They even blacklisted the government-owned People’s Bank.

Sri Lanka told the UN last week not to interfere in China’s domestic affairs. The Sri Lankan delegation in Geneva noted that UN General Assembly resolutions 60/251 and 48/141 require the Human Rights Council and the High Commissioner’s Office to conduct their work in accordance with the principles of impartiality, non-selectivity, constructive international dialogue, and cooperation.

“We reiterate the importance of the Council and its associated entities adhering to these salient principles,” Sri Lanka told the UN Human Rights Council at its ongoing 50th Session. Sri Lanka said it welcomes the visit paid by the United Nations High Commissioner for Human Rights Michelle Bachelet to China, including the Xinjiang Uygur Autonomous Region, at the invitation of the Chinese Government. “We welcome that the Chinese side and the OHCHR had a thorough exchange on cooperation,” the Sri Lanka delegation said. The Sri Lanka delegation added that Sri Lanka has consistently adhered to the One China policy and continues to do so.

The Western Container Terminal that was handed over to Adani Group, it is a joint venture between three parties namely Keells Holdings, Sri Lanka Ports Authority and Adani. The Indian Government backed out saying they have nothing to do with the WCT investment deal.

In contrast to the West Container Terminal, the Adani Group, an Indian private enterprise, has offered to develop the two state-owned renewable energy projects in the Northern Province. This must be thoroughly investigated. G to G cannot be state land to private businessman. It must be done by private company/companies in Sri Lanka with ties to the Adani Group in that so.

Adani paid a private visit to Sri Lanka and met with President Rajapaksa. This was kept under wraps until both parties tweeted about it. Adani also flew to Mannar to assess the potential for RW projects.

There has yet to be an official announcement or statement on the agreement to jointly execute renewable energy projects in Mannar, and Pooneryn, in the northern peninsula. However, the issue was raised last week when the Committee on Public Enterprise (COPE) questioned CEB. The apparent lack of transparency in an international agreement was not visible, and it is unclear who the other stakeholders in the business are if it is a public-private partnership. This came to light prior to the Government’s announcement. The CEB had signed a Memorandum of Understanding with India’s Adani Green Energy Ltd for 500 MW at a cost of USD 500 million. Furthermore, CEB signed an agreement with India’s National Thermal Power Corporation (NTPC) to establish a 100 MW solar power project in the Trincomalee District.

A leading RW expert who is also a consultant to the incumbent government said the whole exercise of offering development projects to overseas investors have never been ‘clean’. He pointed out that it’s vital that state land is used for foreign investments it should be through a tend process to pick a competent investor.

On the condition of anonymity, he added that Adani is expected to be paid around USD 7 cents per kWh unit in dollars, whereas local investors are only paid USD 5 cents. “If Adani pursues such profit-making projects, there will be nothing left for Sri Lanka. In exchange, Sri Lanka should at least receive free fuel and coal in exchange working on a mutual framework,” he added. Sri Lanka’s RE potentials are promiscuous, and allowing outsiders to reap is not very healthy, he added.

He also pointed out many renewable energy experts have submitted so many proposals to the Government of Sri Lanka but the CEB has its influence. “They would want small players where corruption is possible. For Norochcholai oil and coal purchasing, they have made enormous wealth making deals with the overseas companies. Some have foreign credit cards offered by the oil and coal companies though which payments are made to them,” he alleged.

At the end of the day, the public is in the dark and inconsolable agony as a result of mismanagement and corruption on many levels, and it is only now that the people have awoken to see the avalanche of corruption descending on them. Top government officials have resigned. They either leave or watch the game silently while under pressure. Most of them are Ministry Secretaries and top scientist and experts in many fields. Only former CEB chairman Ferdinando shot his mouth off recently later retracting his remarks and resigned. But what he said this time was undeniably correct. Whether Modi pressed the President of Sri Lanka or India pressed him, Adani is a part of India’s government, running most of the ports and other businesses for Modi.

The day Sri Lanka is free of corruption, investors will no longer feel hostile and tormented. 

([email protected])

By Sulochana Ramiah Mohan