Colombo/New Delhi: India and the United Arab Emirates have agreed to jointly develop a major energy hub in Sri Lanka, India’s Ministry of External Affairs announced on Saturday, marking a significant strategic move as New Delhi competes with Beijing for influence in the Indian Ocean region.
The trilateral pact was signed during Indian Prime Minister Narendra Modi’s visit to Colombo — the first by a foreign leader since Anura Kumara Dissanayake became President of Sri Lanka in September.
India has been working closely with Sri Lanka to strengthen bilateral ties, particularly in the aftermath of the island nation’s economic collapse in 2022, during which New Delhi extended $4 billion in financial assistance to aid its recovery.
Saturday’s agreement further intensifies India’s contest with China, whose state-owned energy giant Sinopec has already secured a $3.2 billion deal to build an oil refinery in Hambantota, a port city in southern Sri Lanka known for its strategic location.
The new energy hub will be located in Trincomalee, a natural deep-sea harbour on Sri Lanka’s eastern coast. The project is expected to include the construction of a multi-product pipeline and may incorporate a World War II-era oil tank farm, partially owned by the Sri Lankan subsidiary of Indian Oil Corporation.
“The UAE is a strategic partner for India in the energy space and therefore was an ideal partner for this exercise that is being done for the first time in the region,” Indian Foreign Secretary Vikram Misri told reporters in Colombo. “The exact contours of UAE’s role will be elaborated once the business to business discussions kick off.”
Misri added that the next phase will involve the selection of business entities to examine the financing and feasibility of specific projects under the energy initiative.
In a parallel development, Prime Minister Modi also inaugurated a $100 million solar power project — a joint venture between India’s National Thermal Power Corporation (NTPC) and Sri Lanka’s Ceylon Electricity Board — aimed at strengthening renewable energy ties between the two nations.
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Misri confirmed that India and Sri Lanka have now concluded their debt restructuring process. According to Sri Lanka’s Finance Ministry, Colombo owes approximately $1.36 billion in loans to India’s EXIM Bank and State Bank of India.
Sri Lanka began formal debt restructuring talks following its default in May 2022, reaching a preliminary agreement with key bilateral creditors — India, Japan, and China — in June last year.
In addition to the energy and financial agreements, India and Sri Lanka signed multiple pacts covering power grid interconnectivity, digital transformation, healthcare collaboration, and security cooperation, underscoring a broader commitment to strengthening regional ties.
