Adani vs China battle on the horizon in Sri Lanka
11 Nov 2022 11:42:56
New Delhi, Nov 11: A small group of fishermen plies the shallow coastal water along Pooneryn in northern Sri Lanka, an impoverished, remote area within striking distance of India’s southern tip. It’s where Gautam Adani -- the Indian billionaire who is Asia’s richest man and has vaulted ahead of Jeff Bezos this year -- plans to build renewable power plants, thrusting him into the heart of an international political clash.
With Sri Lanka in the throes of its worst economic crisis since its independence from Britain in 1948, India is re-engaging and attempting to tilt the balance in a strategic tussle with China on the island, a pivotal battleground because it lies on key global shipping lanes and plays into New Delhi’s fear of encirclement from its Asian rival.
Sitting atop a $137 billion wealth pile, Adani controls a sprawling empire that spans ports, coal plants, power generation, and distribution. While he derives the vast majority of his fortune from India, Adani has gradually made more overseas deals and told shareholders in July that he seeks a “broader expansion” beyond India’s borders with “several” foreign governments approaching his conglomerate to develop their infrastructure. Those moves and Adani’s perceived closeness to Modi’s administration have spurred suggestions the tycoon could be the cash cow for India’s pushback against China, whose Belt and Road infrastructure drive is intended to increase Beijing’s influence in strategic countries and on the global stage. “In countries where the Indian government has better relations than the Chinese government, Adani could find success,” said Akhil Ramesh, a resident fellow at the Pacific Forum research institute in Honolulu. While India lacks the financial firepower of its neighbor, Adani’s investments in countries such as Israel and Sri Lanka compete with Chinese state-owned firms. In October last year, Adani emphasized the “strong bonds” between the two nations when he met with then Sri Lankan President Gotabaya Rajapaksa, just months after inking a $750 million Colombo port deal. It was a rare example of Indian infrastructure investment in Sri Lanka, after Colombo in previous years pivoted to Beijing -- which has funded everything from highways to ports through Belt and Road -- and splurged on debt-fueled projects. Soon after that meeting, a team from Adani Group -- which is targeting a $70 billion move toward green energy -- toured Sri Lanka’s north. The region has been starved of investment since the end of the country’s 26-year civil war in 2009. The visit seemed a turning point, as not long after the Rajapaksa administration terminated Chinese solar projects on islands in the Palk Strait between India and Sri Lanka because of security concerns from New Delhi, according to multiple people with direct knowledge of the matter. China’s embassy in Colombo later confirmed the end of the solar projects on social media.
In early 2022, Adani quietly signed memorandums of understanding to build 500 megawatts of renewable energy projects in Pooneryn and Mannar, other northern districts close to India, according to local media reports confirmed months later by a tweet from Sri Lanka’s power minister, Kanchana Wijesekera. India “is worried about Chinese access to the Indian Ocean, and being encircled by Chinese-friendly regimes in Pakistan, Sri Lanka, and Bangladesh,” said Katharine Adeney, a professor and expert on South Asian politics at the University of Nottingham. Adani’s supplanting of China’s solar power projects represents “a strategic move and one that we are likely to see more of,” she said. Spokespeople for Adani Group and India’s foreign ministry declined to comment. China’s ambassador in Colombo and a representative for Sri Lanka’s president didn’t respond to requests for comment. Power Minister Wijesekera also didn’t respond to messages from Bloomberg. The Indian billionaire has even started to publicly criticize China, saying in September at a conference in Singapore, that China was “increasingly isolated” with Belt and Road facing “resistance.”