India has offered a $12 million grant to Sri Lanka in an attempt to displace a contract with a Chinese company to install three renewable energy plants on islands just off the Jaffna Peninsula and around 50km from Tamil Nadu.

The Hindu notes that a number of northern Tamil political parties have voiced opposition to Chinese involvement in the project due to security concerns to Tamils and India.

Jaffna TNA MP, Dharmalingam Sithadthan, told the Hindu;

“We are not opposed to China but given that India has known security concerns in this regard, and also because the project is to come up very close to Tamil Nadu, we oppose Chinese involvement”.

He further said;

 “The people of Tamil Nadu have been lending unconditional support to the Tamil cause, so their security, as well as that of India, is very important to us,” the Tamil National Alliance (TNA) legislator said, adding that India was a “long-term friend” of the Tamil people of Sri Lanka.

Sri Lanka’s Minister, Dullas Alahapperum, has responded claiming that the government would consider India’s proposal. A grant is seen to be an advantage to Sri Lanka given their debt issues.

ECT

The bid follows Sri Lanka withdrawal from the $500-$700-million-dollar East Container Terminal agreement in response to outcry from Sinhala nationalists. Reacting to this news, India initially called on Sri Lanka to fulfil its obligation which it had renewed on numerous occasions.

The ECT agreement would have seen Sri Lanka retain a 51% stake whilst the Adani Group, an Indian business with ties to Indian Prime Minister Narendra Modi would hold 49%. The Hindu highlights that China currently maintains an 85% stake in the Colombo International Container Terminal (CICT), which is under a 35-year ‘Build Operate and Transfer’ agreement with the Sri Lanka Port Authority (SLPA).

Responding to this withdrawal, the Indian government has further demanded that Sri Lanka settle a currency swap agreement worth US$ 400 million as opposed to enabling a further extension. The Rajapaksa administration has said it will not seek to obtain an IMF bailout but has instead looked towards China for further loans.