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India takes Jaffna project away from Chinese company

07 Dec 2021

  • GoSL notes temp. cancellation as India has offered grant
  • Chinese company claims 3rd party interference
  • Tender process to commence anew: State Minister
  • Chinese Embassy stands by firm’s ‘3rd party’ claim
BY Shahaen Vishak A Chinese company, that had been awarded the tender to develop three hybrid power plants in the Delft, Nagadeepa, and Analthivu islands off the Jaffna peninsula, is likely to lose this contract as the project, which was previously being conducted under a loan disbursed by an international financial institution, will now likely be carried out under grant funding from the Government of India instead, The Morning learnt. When contacted by The Morning yesterday (6) to inquire into this, Solar Power, Wind, and Hydro Power Generation Projects Development State Minister Duminda Dissanayake confirmed that the contract has been cancelled. “We originally intended to carry out this project under a loan from an international financial institution, and a Chinese firm was selected through the standard bidding process, but the Indian Government has offered a 75% grant for this purpose, and, therefore, we have cancelled the contract for the time being,” said Dissanayake. The Chinese company is Sino Soar Hybrid (Beijing) Technology Co. Ltd. However, last week, the Chinese Embassy in Sri Lanka had posted the following, on its official Twitter account: “Sino Soar Hybrid (Beijing) Technology Co. Ltd., being suspended from building a hybrid energy system in three northern islands of Sri Lanka due to ‘security concern’ from a third party, has inked a contract with the Maldivian Government on 29 November to establish solar power plants in 12 islands in the Maldives.” A statement issued yesterday from Sino Soar Hybrid (Beijing) Technology also noted that the company was “the pre-winning bidder for the three islands mini-grid project in the northern part of Sri Lanka”. The company’s statement continued: “In the last couple of days, we noticed some misrepresented reports in some local media, claiming that our company took the initiative to suspend the project. This misinformation is against the truth and has violated the legitimate rights and interests of our company and affected the progress of the project. At present, the project is still under a review process, and the progress of the project is unfortunately slow due to the interference of some third party factors as far as we have learned.” Sino Soar Hybrid (Beijing) Technology, in its statement, noted that bids were first called with regard to this project in 2017, by the previous Government, under a loan from the Asian Development Bank (ADB). Although the bidding process had failed to secure a service provider, leading to another tender process in June 2019, under the same guidelines, this saw the tender awarded to the company passing the bidding evaluation and receiving Cabinet of Ministers’ approval on 18 January 2021. The company further noted that it is “waiting for the issuance of the final award letter. The winning bidder shall complete the project within two years (730 days) under the supervision and management of the employer (the Ceylon Electricity Board [CEB]) and finally hand it over to the CEB”. Dissanayake had also noted that the tender had not been officially cancelled as of yet, but added that since the Indian Government grant would be used for this project instead of the foreign loan as initially planned, the tender process would begin from scratch. When contacted about the issue, a representative from the Chinese Embassy reiterated that the company’s statement on the matter provided a definitive stance on the matter, including the company’s claim that a third party had raised concerns over the project’s implementation. In response to a question whether such outside pressure would lead to the Chinese Government pulling out of similar projects in Sri Lanka, the representative replied: “We don’t think so. We hope not.” Although the Indian Embassy in Colombo was unavailable for comment on the matter yesterday, The Times of India reported on 5 December that the Indian Government had been working for almost a year to “get China off three islands in the Jaffna peninsula”. A report in the Chinese media outlet Global Times, in response to the same issue, quoted a source close to the Sino Soar Hybrid (Beijing) Technology Co. as stating: “It is ridiculous that India uses security reasons to meddle in the project. The Sri Lankan project is small, supplying electricity to villages on three small islands. Since the islands and the main territory of Sri Lanka are separated by the sea, it is very likely that the power grid will not be connected to other places in Sri Lanka.” In this backdrop, former Prime Minister and incumbent Opposition Parliamentarian Ranil Wickremesinghe, speaking at the Indian Ocean Regional Conference on 4 December, had noted that increasing rivalries between global powers would lead to instability in the Indian Ocean Region (IOR). “The entanglement of great power rivalry in the Indian Ocean risks removing the focus on the public health shortfalls, digital inequalities, education disparities, unemployment, and social fragmentation in some of our countries. The end result will be a further de-stabilisation of the IOR,” he said.


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