• CEB technical team to visit India for grid connectivity project
• Other projects include Trinco Industrial Zone and dairy projects
• No agreements to be signed during presidential visit, only prior 

Three key projects related to power and energy, agriculture, and maritime affairs that are in the pipeline are likely to be finalised ahead of President Ranil Wickremesinghe’s official visit to India on 21 July, The Sunday Morning reliably learns.

It is learnt that the projects include electricity grid connectivity, a dairy development project with the National Livestock Development Board (NLDB), and the development of the Trincomalee Industrial Zone.

Sources close to the subject told The Sunday Morning that it was unlikely that the President would sign any agreements or Memoranda of Understanding (MoUs) with India during his visit. However, some agreements may be signed prior to his departure to India on the evening of 20 July.

Diplomatic sources close to the matter told The Sunday Morning that discussions were ongoing, although nothing had yet been finalised. However, negotiations are likely to be finalised by next week.

Grid connectivity

Among the key Indian projects in the pipeline, the grid connectivity between the two countries is in the spotlight due to the energy security issues Sri Lanka is facing and due to the power sector’s high production cost, owing to its heavy dependence on petroleum fuel imported to the country.

As reported previously by The Sunday Morning, an expert team from the Ceylon Electricity Board (CEB) is leaving for India today (9) to inspect the technical feasibility of the project. The team will be visiting ahead of the President’s visit as he intends to sign any agreement prior to his departure to India the following week.

However, a senior Government official The Sunday Morning spoke to questioned whether Sri Lanka had sufficient time to finalise agreements before an MoU with India was signed within the next two weeks, as experts’ opinions on technical feasibility were yet to be given.

When contacted by The Sunday Morning, CEB Chairman Nalinda Illangakoon expressed confidence that the team would be able to provide the required assistance to the Government.

The grid connectivity project has been in discussions with Nexant since 2002, with the United States Agency for International Development (USAID) assisting to carry out the pre-feasibility study. It was a first step in developing the project concept and was expected to serve as the basis for future technical and economic analysis. 

Power Grid Corporation of India Ltd. (POWERGRID) reviewed and updated the study with USAID assistance in 2006 and later, the Governments of India and Sri Lanka signed an MoU in 2010 to conduct a feasibility study for the interconnection of the electricity grids of the two countries. 

This feasibility study was jointly carried out by the CEB and POWERGRID with the main objective of providing the necessary recommendations for implementation of the 1,000 MW HVDC interconnection project.

As stated in the Long Term Generation Expansion Plan (LTGEP) 2023-’42, as per the initial proposals on the feasibility study and also with the economic and financial analysis, the project was not economically or financially viable. As highlighted, major items which were affecting the project cost were submarine cable and High-Voltage Direct Current (HVDC) technology (conventional HVDC or VSC-based HVDC) selection.

As estimated by the CEB, the HVDC interconnection project is expected to cost around $ 18,883 million.

Although the project was included into the CEB’s LTGEP 2023-’42, it is learnt that there has been opposition within the CEB itself over the implementation of the project, as a section of engineers believe that if the project is fully funded by India, it would be advantageous to the country, but that if Sri Lanka bore half the cost of the project, it would have no positive effect on the country’s power sector.

Nevertheless, the Government has already decided to proceed with the project with an assurance recently given by Power and Energy Minister Kanchana Wijesekera that the India-Sri Lanka grid connection would be implemented by 2030.

In a recent tweet, the Minister said: “Regional energy integration has been discussed for more than two decades and the Government has made it a priority to implement the India-Sri Lanka grid connection by 2030.”

Wijesekera also said the World Bank had been assisting the CEB to understand the technical requirements and business models to implement the project, adding that he had discussed the plans related to energy integration and renewable energy development with World Bank Director of Regional Integration and Engagement Cecile Fruman and Country Manager for the Maldives and Sri Lanka Chiyo Kanda.

Dairy development

In the meantime, it is learnt that two discussions initiated by the Presidential Secretariat and the Ministry of Agriculture are currently underway to develop the country’s dairy industry.

As per the Agriculture Ministry, there have been discussions between India’s Amul Milk and Sri Lanka’s National Livestock Development Board to obtain technical assistance in order to develop local dairy farming and thereby, to boost the country’s milk production.

In parallel to these discussions, the Presidential Secretariat too has initiated discussions with the same company following instructions given by President Wickremesinghe and Amul has expressed its willingness to provide technical assistance to the NLDB, it is learnt.

As a result of these discussions, the two entities are likely to sign the agreements for the development of the local dairy industry ahead of the President’s visit.

A senior official attached to the Ministry of Agriculture, who wished to remain anonymous, told The Sunday Morning that Sri Lanka planned to import dairy cows from India to boost the dairy industry. 

The cows are to be imported from India. This follows the controversial importation of cows from Australia’s Wellard Ltd. in 2014. Most of the cows imported under the Wellard project failed to meet expectations and died due to a number of issues.

The project was initiated in 2014 with the aim of enhancing the country’s milk production and to achieve self-sufficiency in milk production by 2020. An agreement was signed by the then Government in 2014 with Australia’s Wellard Rural Exports Ltd. for a project worth $ 73 million for the purpose of importing 20,000 heifers from Australia.

The project was revived by former Minister P. Harrison and as a result, the Government imported 2,000 heifers from New Zealand on 12 May 2017 following Cabinet approval obtained on 24 March 2017. Again in December 2017, 3,000 heifers were imported from Australia.

As revealed by Auditor General W.P.C. Wickramaratne last year to the Committee on Public Enterprises (COPE), a total of 3,991 dairy cows from among the 4,995 imported had died. $ 11.01 million had been paid four years prior as an advance payment to import 15,000 additional dairy cows but to no avail. Four years have passed since the advance payment had been made, but no cows have arrived since.

However, referring to the Wellard project, the senior Agriculture Ministry official stressed that the authorities had focused on importing cows from India considering the similarities of the climate and environment between the two countries.

He stressed that most cows imported from Australia did not survive in Sri Lanka due to the climate changes. “Ideally, the cows should either be imported from India or Pakistan, but the two countries are no longer exporting cows. Therefore, Sri Lanka is now seeking the assistance of India’s Amul Milk to import the required cows to Sri Lanka in order to enhance the country’s milk production,” he said.

When contacted, Agriculture Minister Mahinda Amaraweera said discussions were currently underway to boost the country’s dairy production, although no final decision had yet been taken.

In December last year, President Wickremesinghe appointed a committee consisting of representatives of the public and private sectors of Sri Lanka to work with the multidisciplinary team of the National Livestock Development Board of India to prepare short, medium, and long-term plans to increase local milk production to reduce the country’s dependence on imported milk powder.

Industrial zone

In addition to the dairy and power projects, the project to develop an industrial zone in Trincomalee too is currently under spotlight, as it has been selected as one of the key projects for which the MoUs would be signed between the two countries prior to the President’s visit. 

In October last year, President Wickremesinghe declared that the Trincomalee Port should be developed as a strategic port with India’s assistance. 

He highlighted that the eastern port should be transformed into a deep water port as the Eastern Province played an important role in naval affairs. 

“We are working with India on renewable energy with the aim of making Trincomalee an energy hub based on the existing relations between Trincomalee and India, alongside the development of renewable energy with value additions such as green hydrogen and green ammonia. Therefore, we need a port to export green hydrogen. As such, the potential in Trincomalee should be taken into consideration,” he said. 

As per the Sri Lanka Ports Authority (SLPA) plan, a Special Economic Zone (SEZ) or an energy hub is to be established in the area to increase commercial cargo traffic to the Trincomalee Port and develop it as a new industrial hub. 

The Trincomalee region already has international investors plugged into its facilities. 

The Trincomalee Oil Tank Farm has been leased out to the Lanka Indian Oil Company (LIOC) by way of an agreement in 2003 on a 30-year lease, which expires in 2033.

Altogether, 99 tanks have been leased out. The farm initially had 101 tanks built within an area of 850 acres. However, two of the tanks were destroyed by aircraft in 1960. The initial construction of the oil tanks commenced in 1924 and ended in 1930. Following independence, the tanks fell into disuse. The LIOC has refurbished 15 of them in the Lower Tank Farm, which are now in use. Collectively, all tanks are able to hold up to 1.2 million tonnes of fuel.

The MoU for the development of an industrial zone in Trincomalee is to be signed in a backdrop where the West Container Terminal (WCT) was also handed over to India.

India’s Adani Group signed a Build-Operate-Transfer (BOT) agreement with its local partner John Keells Holdings PLC and the SLPA on 30 September 2021 to develop the WCT in Colombo.

Operations of the West Container Terminal will be carried out by a new joint company named the West Container International Terminal. A 51% stake of WCT will be with Adani Group, 34% with John Keells, and 15% with the SLPA.

When contacted by The Sunday Morning, State Minister of Finance Ranjith Siyambalapitiya said that the President had yet to discuss the matters regarding his visit to India with the Finance Ministry. State Minister of Finance Shehan Semasinghe said that these matters would most likely be discussed this coming week.