India, UAE to develop Sri Lanka energy hub as Delhi competes with China for influence

India and the United Arab Emirates have signed a landmark agreement with Sri Lanka to jointly develop an energy hub in the strategically located port city of Trincomalee, India’s foreign ministry said on Saturday.

The deal, announced during Indian Prime Minister Narendra Modi’s visit to Colombo, marks the first visit by a world leader since Sri Lankan President Anura Kumara Dissanayake took office in September.

The trilateral project is being seen as a strategic move by New Delhi to strengthen its regional footprint as China expands its influence on the island.

Beijing’s state energy firm Sinopec has already signed a $3.2 billion agreement to construct an oil refinery in Hambantota, a southern port city heavily backed by Chinese investment.

Trincomalee, located on Sri Lanka’s eastern coast, is home to a natural deep-water harbor and a World War II-era oil tank farm, partially operated by the Sri Lankan arm of the Indian Oil Corporation.

According to Indian Foreign Secretary Vikram Misri, the energy hub will include a multi-product pipeline and could leverage existing tank facilities.

The role of the UAE, described as a “strategic energy partner” by Misri, will be finalized after business-to-business talks begin.

The three countries will now select business entities to assess the financing and feasibility of the hub.

During the visit, Modi also launched a $100 million solar power plant, a joint venture between Sri Lanka’s Ceylon Electricity Board and India’s National Thermal Power Corporation (NTPC).

India and Sri Lanka concluded their debt restructuring process, with Colombo owing $1.36 billion to India’s EXIM Bank and State Bank of India.

The countries also signed agreements covering energy grid connectivity, digital infrastructure, healthcare, and security cooperation, marking a deepening of bilateral ties as Sri Lanka recovers from its 2022 economic crisis.