Renewable energy projects and investments in information technology in Sri Lanka and two credit lines for fuel and food were among the areas of economic cooperation that External Affairs Minister S Jaishankar and Sri Lankan Finance Minister Basil Rajapaksa discussed in a virtual meeting, Trend reports citing The Indian EXPRESS.
The meeting, which the Ministry of External Affairs described as “detailed”, took place on the heels of significant developments between the two countries. Earlier this month, Sri Lanka finalised a long-pending agreement for the joint development of the Trincomalee oil tank farms between Ceylon Petroleum Corporation and Lanka IOC, a subisdiary of the Indian Oil Corporation. And on Thursday, Delhi signed off on Colombo’s 2020 request for a $400-million credit swap facility and a deferred Asian Clearing House settlement of $515.2 million.
The two ministers also discussed the early release of Indian fishermen detained in Sri Lanka for alleged trespass in its waters.
Rajapaksa was to travel to India on Januaray 10 for the Vibrant Gujarat summit 2022, where he was expected to meet top Indian functionaries and potential investors. The summit was postponed on account of the latest outbreak of Covid-19, and the two sides decided to hold a virtual meeting instead.
Enabling Indian investments in Sri Lanka was one element of a “four pillar” package that Delhi put on the table when Rajapaksa last visited to discuss financial assistance in Nov 2021. A second ask from Colombo at that meeting was the early finalisation of Trincomalee oil storage joint development project. Though the sides avoided describing it as a quid pro quo, the other elements were two credit lines, one for $500 million for essential commodities, and another for $1 billion for fuel.
Import-dependent Sri Lanka is in the throes of an acute economic crisis due to a foreign exchange shortage. It has to repay debts totalling $7 billion in 2022.
Following Rajapaksa’s visit to Delhi, Sri Lanka finalised the Trincomalee agreement, hanging fire since 2003, over December and January. A statement from MEA on the meeting said “both ministers noted that the recent steps taken by the Government of Sri Lanka for jointly modernizing Trincomalee Oil Tank Farms will boost the confidence of investors, apart from enhancing Sri Lanka’s energy security”.
In a tweet Jaishankar “welcomed the progress on Trincomalee Tank Farm which will contribute to energy security”.
The two sides are now close to “dotting the i’s and crossing the t’s” of the credit line for fuel, while the modalities of the credit line for food are still being worked out, The Indian Express has learnt.
Meanwhile, the January 13 USD 900 million package from India – a $ 400 m credit swap facility and the USD 512 deferred ACU settlement – came in the nick of time for Colombo, which is staring at a $ 500 m overseas bond servicing deadline on January 18.
During the meeting, Jaishankar conveyed that India has always stood with Sri Lanka, and would continue to support that country in all possible ways for overcoming the economic and other challenges posed by the COVID-19 pandemic, the MEA said.
“We positively noted the extension of the USD 400 million swap facility and the deferred ACU settlement of USD 515.2 million. Discussed the early realisation of USD 1 billion term loan facility for essential commodities and of USD 500 million LoC for fuel purchase,” the External affairs minister said.
Jaishankar said he assured that India will take up with other international partners initiatives to support Sri Lanka at this important juncture.
“Considered projects and investment plans by India that would strengthen the Sri Lankan economy,” Jaishankar said.
The MEA statement said Rajapaksa welcomed Indian investments in Sri Lanka in a number of important spheres including ports, infrastructure, energy, renewable energy, power and manufacturing and assured that a conducive environment will be provided to encourage such investments.
Top of the list are investments in wind and solar energy farms in the the North and East of Sri Lanka, and in the IT sector. In 2020, HCL Technologies opened in Sri Lanka and employs a local workforce of about 1,000 people. The two sides discussed more such investments at their meeting on Saturday.
It said the two ministers agreed to remain in close touch for guiding mutually beneficial bilateral economic cooperation towards long-term economic partnership for shared progress and prosperity.
As close friends and maritime neighbours, both India and Sri Lanka stand to gain from closer economic interlinkages, the external affairs minister conveyed during the virtual interaction.
“This could be the moment that takes the economic partnership to a new level not just through short term measures but also by creating long term inter-connectedness,” Gopal Baglay, India’s High Commissioner to Sri Lanka, told The Indian Express.
According to media reports, Sri Lanka is also in talks with Beijing for a restructuring of its $ 5 bn debt, and in addition, has requested for another loan over the $1.5 bn currency swap and a USD 500 m loan that Beijing gave last year.
During the meeting, Jaishankar also raised the issue of Indian fishermen in Sri Lankan custody and urged for their early release as a humanitarian gesture.
“External Affairs minister brought up the issue of Indian fishermen detained in Sri Lanka. He urged the Government of Sri Lanka to ensure early release of the detained fishermen on humanitarian considerations,” the MEA said. Last month, the ministry said that 68 fishermen from Tamil Nadu have been taken into custody by the Sri Lankan authorities between December 18-20. While expressing concern over the detention, the ministry asserted that steps were being taken to ensure their early release.
The issue of fishermen remains one of the irritants in India and Sri Lanka ties and there have also been several alleged incidents of Sri Lankan Navy personnel firing at Indian fishermen in the Palk Strait and seizing their boats. “Just concluded a detailed virtual meeting with Sri Lankan Finance Minister @RealBRajapaksa. Reaffirmed that India will be a steadfast and reliable partner of Sri Lanka,” Jaishankar tweeted after the meeting.
Jaishankar conveyed greetings to the finance minister, people and the government of Sri Lanka for the year 2022 and on the occasion of the Tamil festival of Pongal celebrated both in India and Sri Lanka, the statement said.