It is hard to look back and think of a time when Sri Lanka was energy secure. Power cuts through load shedding, breakdowns in power plants, coupled with the lack of administration, planning, and investments in energy generation, administrative red tape, and the lack of investor confidence have added to this situation. Sri Lanka has also found it a challenge to meet the demand for its energy needs owing to reasons affected by geopolitical and external factors, some of which are beyond the Island’s control.
This inability to become energy independent or make progress in attaining energy security has had wider implications on the Island’s economy, the day-to-day lives of the public, and on national security. With limited capital and resources for energy production, the options available to Sri Lanka for energy generation are limited. Sri Lanka’s annual total electricity demand is 14,150 gigawatt hours (GWh), which is expected to increase by 4.9% over the next 20 years. The rise in energy consumption due to changing lifestyles and industrialisation has meant that the energy sector struggles to satisfy the demand. This dilemma reached its climax when load shedding measures began last year (2022) to control the demand and supply for electricity. What resulted – along with a plethora of growing tensions – was a series of political transitions that eventually led to a sitting President (Gotabaya Rajapaksa) being sent home through public pressure.
The International Energy Agency defines energy security as the “uninterrupted availability of energy sources at an affordable price.” This is further categorised as long-term energy security involving investments in the energy sector to boost the supply, heeding impending environmental and economic trends. Short-term energy security focuses on existing power generation systems to deal with rapid changes in the energy supply and demand. Looking at Sri Lanka, it is obvious that both such aspects of energy security are not met through existing resources, governance, and energy sector administration.
Means to an end
Sri Lanka’s importance as an important hub in the Indian Ocean for trade, security, and strategic dominance has enticed actors from the region and afar to engage with the Island constructively while attempting to gain strategic influence. Apart from profit making motives, assistance to ensure Sri Lanka’s energy security has been furthered to establish strategic links. External powers such as India, China, the United States of America (USA), and Russia have shown their interest in investing in Sri Lanka’s energy sector through State-to-State and State backed private initiatives.
Power generation or power play
The most noticeable external actor in Sri Lanka’s energy generation has been India. With a number of renewable projects being initiated, India is slowly but gradually realising its objectives of using energy as a currency to gain influence. Recently, Indian media reported on a joint project between the National Thermal Power Corporation of India and the Ceylon Electricity Board (CEB) to construct a 135-megawatt (MW) solar power plant closer to the strategically important Port of Trincomalee. Such projects are in line with India’s recent policies to engage with Sri Lanka through energy diplomacy, as spelled out by Minister of External Affairs, Dr. S. Jaishankar at a meeting in Colombo. Jaishankar spoke on the potential of Trincomalee and Sri Lanka to become a hub for renewable energy, with investments hinting that India is committed to investing in renewable energy generation in Sri Lanka.
Sri Lanka has formalised agreements with India’s Adani Group for a $ 442 million investment in constructing a wind power project in the North. Minister of Foreign Affairs, President’s Counsel M.U.M. Ali Sabry made the headlines last month (March) when he likened the agreement between a private Indian firm and the Sri Lankan Government to a “Government-to-Government deal”, hinting at the active role that the Indian Government plays in securing such investments.
Withstanding controversies, India is keen to continue with its investments, particularly in the Northern and Eastern regions of the Island driven by two reasons. One is to ascertain its influence in an area that India sees as its backyard with hope that a continuous presence in the region through investments that enhance the quality of life of the locals would facilitate future dealings and provide a basis for mutually beneficial arrangements. The second reason is to discourage other external actors (mainly China), from creeping into an area that India sees as strategically important. By limiting avenues for others to engage in investments and gaining strategic footholds, India seeks to further its presence in the region. This was seen with the backtracking of the Sri Lankan Government, owing to Delhi’s displeasure, to deny the awarding of tenders to a Chinese firm to set up a renewable energy project in the Jaffna Peninsula. Later, India negotiated successfully to implement the project through Indian funding, in its favour.
Electric grid linking and transmission interconnection between India and Sri Lanka has been mooted for over a decade. Linking Sri Lanka’s power grid through India to the South Asian mainland started as an ambitious project. The National Energy Policy and Strategies document of Sri Lanka identified “viable cross-border electricity transfer and cooperation with countries in the region” as a strategy to attain energy security. Initially designed to import energy from India, recent developments have suggested that the nature of the grid linking has altered to export energy produced in Sri Lanka through Indian renewable energy investments, back to India. The ongoing discussions have not revealed the nature of the operation but one might wonder about the practicality of such owing to the complicated relations that the Island shares with its domineering neighbour. Where a scenario of energy exportation could be recognised as beneficial, Sri Lanka must consider the implications to national security if energy importation is involved, given the disparity between the two States’ power and influence over each other.
Concerning China, 22% of the $ 12.1 billion of loans and investments from China to Sri Lanka during the period from 2006 to 2019 has been spent on the power and energy sector. This establishes the role that China has played in contributing to satisfy Sri Lanka’s energy demands. Navigating through geopolitical contestations, China has shown interest in investing in the renewable energy sector in Sri Lanka. The Chinese State-owned China National Energy Engineering and Construction Company showed interest in investing $ 800 million on renewable energy projects in Sri Lanka. Minister of Power and Energy Kanchana Wijesekera has spoken of the Government’s intention to seek a credit line from India or China to facilitate the importation of solar panels as a means of mitigating the burden imposed on the public by unaffordable electricity tariffs. The progress of such initiatives with China is not clear.
It is no secret that a part of Sri Lanka’s energy crisis was born out of the lack of investments towards power generation. The Chinese funded and built Norochcholai coal power plant stands as an outlier. However, technical and environmental problems relating to the Norochcholai coal power plant and the dissatisfaction amongst the Sri Lankan public relating to failing Chinese investments, and increased involvement in the Island, along with India’s reservations, act as spoilers towards realising Chinese energy projects. It is a reminder of the inherent geopolitical characteristics of Sri Lanka’s energy security problems.
Russia has extended its energy prowess to engage better with South Asia. With nuclear power plants being built in India and Bangladesh with Russian expertise, and the country seeking to do the same in Sri Lanka, Russia is affirming its pivot to the East to counter the losses it faces with the West shunning Russia’s energy resources. Current discussions have revealed Government level plans to set up a series of small nuclear reactors, both onshore and offshore, that could generate 100 MW each. Unlike Russian initiatives to provide fuel, which were disrupted owing to concerns from the West, the Sri Lankan Government has entertained Russian proposals to establish nuclear power generation facilities through concessionary financing. However, Sri Lanka would bear added responsibilities to house and operate nuclear facilities owing to the risks involved. The ratification of international instruments relating to nuclear power generation, domestic legal provisions, and the training of local staff along with contingency measures are aspects that need to be looked into while addressing safety concerns from neighbouring States.
Apart from being an efficient, clean energy source, the use of nuclear reactors could lower the costs of energy generation. In Russia, the cost per unit of electricity generated through nuclear power is 0.56 rubles (Rs. 2.40), whereas in Sri Lanka, a unit of electricity (non-nuclear) costs Rs. 30 (price per one unit of electricity for the first 30 units). The costs of nuclear power generation are mostly immune to price fluctuations and inflation. However, the risks of nuclear power plants concerning safety, the competency of the local staff to manage operations and the initial costs involved could deter both the public and the Sri Lankan Government from embracing such. Sri Lankans will have to be educated on the use of nuclear energy, as experiences have shown how public sentiments have led to governments shelving energy generation plans such as the Sampur coal power plant. Russia’s standing internationally, due to the Ukraine conflict, provides grounds to derail potential plans owing to sanctions, embargoes, and vulnerabilities in their economy to sustain funding.
Though its strategic interests in the region are fairly met through India, the USA has sought to establish an energy foothold in Sri Lanka with the American New Fortress Energy Inc. (NFE) taking a 40% stake of the West Coast Power Limited that owns the Yugadanavi Power Plant. The deal allows for the construction of an offshore liquefied natural gas terminal and the supply rights of gas to the Kerawalapitiya power plant. The Supreme Court recently ruled in favour of the Government and NFE in relation to Fundamental Rights petitions filed by concerned parties.
Propelled as a means to generate cheap, green energy, the lack of transparency in bypassing the established tender procedure, the Cabinet of Ministers’ approval being rushed sans prior briefing and the lack of clarity regarding project dealings, led to Government politicians along with the Opposition and trade unions opposing the deal. In addition, the provision of gas supply rights to a single Company along with the erosion of oversight by the CEB were cited as reasons that could undermine energy security. Though labelled as the biggest agreement that Sri Lanka has entered into with a private company, it is thought that the deal was rushed through the decision-making circles with the backing of the relevant States. The uncertainty as to where the project lies adds to the lack of transparency on how it has been initiated.
Conclusions
Incidents of last year (2022) were an awakening to Sri Lankans on the importance of energy security. The struggle to meet energy demands educated many on how energy security affects individuals at all levels. However, in its desperation to attain energy security, subdue perceptions of public agitation, attract energy investments, and facilitate economic growth, Sri Lanka should not turn its energy security into a new form of energy dependence. Global interest in investing in Sri Lanka’s energy sector should be of mutual interest and primarily serve the interests of the public. The inherent strategic nature of power and energy generation and the involvement of strategic assets that are exposed to external actors by opening up investments in the energy sector should be considered. Far thought out, independent decisions made from an economic and a national security angle are warranted. Such could alleviate sensitivities that in the past led to the shelving of energy projects, thus making Sri Lanka’s energy security precarious.
Investments in greener, renewable energy will aid Sri Lanka’s aim to generate 70% of its electricity requirement by 2030 from renewable energy sources. This will bring in economic benefits with lower electricity prices and address the existing uncertainties relating to the supply of fuel oil and coal for energy generation. Volatile situations internationally such as terrorism and regional disputes have threatened the Island’s reliance on certain modes of energy generation, creating additional vulnerabilities and even presenting scenarios where resource exporting nations could use energy as a leverage to influence Sri Lanka. Attaining energy security over energy dependence would address such issues in moving forward.
(The writer is a research consultant on peace-building and reconciliation, and strategic studies)
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The views and opinions expressed in this article are those of the author, and do not necessarily reflect those of this publication.