Colombo sees the Adani projects in Sri Lanka as a “government to government kind of deal”, said Sri Lankan Foreign Minister MUM Ali Sabry, as it was the Indian government that had identified the Adani group for infrastructure projects including Northern Sri Lanka wind power project.
Stressing that his government is “very very confident” that Adani Ports, Airports and Energy companies have strong fundamentals despite the $140 billion drop in share values after the publication of a negative report by US short seller Hindenburg, Mr. Sabry said that the Adani group has already begun investing in its projects, which also include the $700 million Colombo West Container Port project.
“So, we are not panicking,” Mr. Sabry told The Hindu.
in an interview in New Delhi where he met with External Affairs Minister S.Jaishankar and participated in the MEA’s Raisina Dialogue conference. Mr. Sabry said Sri Lanka is grateful for India’s assistance with the economic crisis, and hope for more Indian investment in the next phase of its economic recovery, once it is able to receive a $290 billion bailout package from the International Monetary Fund, scheduled to meet next month.
The Adani wind power project had come into controversy last year when the chairman of state-owned power entity Ceylon Electricity Board (CEB) MMC Ferdinando had told a parliamentary panel that it was granted on the basis of a request from Prime Minister Narendra Modi to then Sri Lankan President Gothabaya Rajapakse. Mr. Ferdinando subsequently retracted his statement and resigned from the post.
Excerpts from interview
Sri Lanka’s economic recovery, trade, investment and the development partnership were at the top of the agenda as Sri Lankan Foreign Minister Ali Sabry met with External Affairs Minister S. Jaishankar in Delhi on March 4. Speaking to The Hindu earlier, the Sri Lankan Foreign Minister said that his government’s focus is on the IMF bailout package expected to be decided at the Spring Session in April, for which China’s written assurances are still needed. He also said that despite the company’s recent troubles, he is confident that the Adani group will complete its projects in Sri Lanka, which were negotiated as “government to government” deals.
You last dealt with New Delhi as Finance Minister. How much has your focus shifted as Foreign Minister, and what [was] on the agenda for talks with EAM Jaishankar?
It is still a mix of both, as I still have to carry out some of the responsibilities in [debt] restructuring and economic diplomacy, because the President is the finance minister, and naturally, he cannot travel as often as we would like. With India, we have had very good discussions during the last two years. Of course, we have been traditionally very good friends, but during the last year or so, India had really come to our rescue, India had provided us a lifeline which allowed us to stay afloat during a very difficult time.
We can now see some resurgence in our economy — inflation is down, the rupee has stabilised more tourists are coming back and more remittances are coming in. We are not out of the woods but stabilised right now, and what we are looking at next is recovery, for which we need investment. So right now, what we are interested in with India is how to collaborate and how to integrate the Indian economy, particularly with South India, in terms of investment, people-to-people connection, more tourists coming in. So that’s the kind of thing is it’s a win win situation for all.
Before we discuss projects, I wanted to ask about the debt situation. China has not yet given those written assurances required for the IMF to take the next step on Sri Lanka’s [$2.9 billion] bailout package, is that something that is going to become a problem- we’re just a month away from the IMF’s spring session?
Yes, we have been in discussion with the IMF [about the package]. The Chinese Government and has, in principle told the IMF that they would like Sri Lanka to get the Extended Fund Facility (EFF) and move on with it, but that is not compatible with the IMF requirements. So we are trying to narrow that gap. And hopefully, they will also come around and we are very hopeful during the month of March, we should be able to unlock the EFF from IMF.
The moment the IMF Fund comes in, it brings a lot of creditworthiness to the entire system and confidence. It’s not as if the $2.9 billion per se, given out by the IMF in two to three years’ time that makes a huge difference on its own. But the fact that Sri Lanka is able to engage IMF and receive the offer means a lot in terms of bringing confidence back to the situation. A lot of other agencies like [the] World Bank, AIIB, and ADB, have lined up funds to come in, and Institutes like JIICA, the Japanese agency is there. So IMF is very, very central for us to get the confidence back on track.
And then probably, if we have thereafter if we have a good, understandable debt restructuring session, then our debt becomes more sustainable. And with that, we will probably have access to the capital market once again. That’s the plan. So that will now we have stabilising the economy. We have prevented a catastrophical dive which some other countries have seen, and I think we have managed inflation pretty well from 95% now down to 50%. So that’s a good achievement comparatively what we were in last year, but for growth to take place, and for recovery to take place, confidence needs to be built and for that the IMF bailout, is very, very central for us.
Are India’s projects in Trincomalee, that have been pending since 2018 when the then Prime Minister Ranil Wickremesinghe had first signed an MoU, now been given an impetus?
Yes, I think there has been impetus all around. We have seen that Indian tourists are coming investors are coming, some of the big Indian companies have already started their projects on renewable energy, wind power as well as the port development. With the Trinco projects, those are in the pipeline and we do know that this is the time we have to materialise this promise given a long, long period of time ago.
One of those big Indian companies is the Adani group. Are you confident that the Adani companies involved in the Colombo port terminal project and Northern SL Wind power project can complete these projects, given the troubles they’ve been in over the past month?
We are very, very confident that they will do it and we also understand they do have footfalls in their airports and ports, both in India and outside, in railways, in renewable energy, and they are seen as a big company. This speculation on the stock market is not a new thing, this happens all over the world. So, we are not panicking at all. And we are very, very confident they will be able to complete the project. And this will become a precursor for much more investment to come from so many diverse investment institutions in India. So we are definitely not worried.
One of the allegations was that it was the pressure from the Prime Minister’s Office in India that actually led to the wind power project being given to the Adani group. Do you think the Adani group comes with the confidence, the [backing] of the Prime Minister’s office and that’s why it gets these projects?
Not really. In our case, of course, we were keen on an Indian investor to come in, so who the Indian investor was for the Indian government and the authorities to decide and choose and send it to us. And then we will have our own feasibility and fact-finding, and if we are happy, we will take it. So that’s how it happens all over the world. So we are happy. And we have no complaint, so far, because they have been investing, they’re going on with the project. And they have been successful both in India and in the region. So why not? A big name like that comes in. And there are a lot of other countries and other companies could be envious of them.
For us, there is absolutely nothing to worry [about], because it is a transparent process and a government-to-government kind of a project. And then of course G2G doesn’t mean that the government gets involved and is doing business, it means the government identifies the entities. So that is the process which had been followed in the Adani’s coming into Sri Lanka.
So it’s seen as a government approved project. Even though they have lost $140 billion in market capitalisation, are you convinced these projects will be completed on time?
Yeah, no, the problem is that the stock market is a very vulnerable thing. Companies go up and down — Facebook has lost market capitalisation, [and] the big timers, particularly in the tech industry have lost. It goes up and down but doesn’t mean that the project is in trouble. They have the capital, they have the foundation, [and] these projects are ongoing. So people can have their own valuation, on speculation, on [the] growth potential and all those things…. Merely because [the] stock market goes down doesn’t mean that your project on the ground will get wiped out all of a sudden. That investment has come in. That’s what I heard from my investment ministers.
Last year India protested quite vocally about the docking of a Chinese naval ship in Hambantota Port — has Sri Lanka given India assurances that this kind of controversy will not recur?
I think it’s a complex relationship. Sri Lanka has been a very close friend of India and doesn’t want to do anything which hurts the Indian legitimate sentiments on security concerns. But in the meantime, one also needs to understand that we need to work with everybody. Despite all the problems China is also India’s biggest [trading] partner. Similarly, we also want to work with Indians and the Chinese and the West and everybody. But in the meantime, [for] any legitimate security concerns of Indians, we will find a way to discuss with them collaborate with them, and identify them. And not to repeat anything that could be a concern. But in the meantime, we also want to ensure the freedom of movement in the Indian Ocean for everybody’s betterment.