Sri Lanka, India to Sign Power Grid Pact in 2 Months

Published on:
by KnowESG
KnowESG_Sri Lanka India
Image of Sri Lanka's trade unions of the essential services protest against the increase in the Personal Income Tax due to economic crisis.

Sri Lanka and India will sign a pact to link their power grids and start negotiations on an upgraded trade agreement within two months, a Sri Lankan diplomat said on Wednesday, as the island nation seeks a way out of its worst economic crisis in decades.

India has provided some $4 billion in assistance to its southern neighbour since the crisis hit early last year, but Sri Lanka is now seeking to enhance trade and investments as it moves to close a $2.9 billion loan from the International Monetary Fund, the country's envoy to New Delhi told Reuters.

"We have to have growth; otherwise, basically, the economy will shrink," Milinda Moragoda said.

"As far as growth is concerned, India offers that prospect. So we will have to move on that. Tourism from India, investment from India, integration with India. That's what we have to do."

A big part of Sri Lanka's plan to get its economy back on track is to develop its renewable energy resources in the north of the island. From there, power can be sent to southern India through a transmission cable that crosses the border.

The two countries resumed talks on linking their electricity grids last year, and Moragoda said a memorandum of understanding on the project would be signed within two months, which will be followed by a feasibility study.

First proposed more than a decade ago, the project has made little progress so far. But Moragoda said Sri Lanka hoped to get the transmission line in place within two to three years so that renewable power produced on the island can be sold to India.

"We need to have more sources of foreign exchange, and electricity will be ideal," he said.

The neighbours will also start negotiations within weeks on enhancing an existing free trade agreement, Moragoda said, as part of a push by Sri Lanka to seal deals with key trading partners, including China and Thailand.

"On our side, we are just about to nominate the (negotiations) team," he said, adding that the focus would be on enhancing trade in sectors including textiles and garments, a major foreign exchange earner for Sri Lanka.

India is Sri Lanka's biggest trading partner, accounting for about $5 billion each in bilateral trade in 2021.

For more investor-related news

Source: Reuters


Investors Headlines

dnata First Air Services Provider to Get IATA's IEnvA

dnata First Air Services Provider to Get IATA's IEnvA

Bridgestone Plant Verified Carbon Neutral by LRQA

Bridgestone Plant Verified Carbon Neutral by LRQA

The LYCRA Company Reports on 2030 Sustainability Goals

Graphic Packaging ESG Report: Progress on All Pillars

Bunker Holding Commits to ESG, Launches New Report

STAHL Earns Second Platinum EcoVadis Rating

Endava Reports on Sustainability Progress

Ardagh Awarded EcoVadis Platinum Sustainability Rating

Cabot Enhances Sustainability with ISCC PLUS

ESG Agencies Laud Ignitis Group's Progress