India and UAE to build strategic energy hub in Sri Lanka
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In a significant move aimed at strengthening regional influence, India and the United Arab Emirates (UAE) have agreed to jointly develop an energy hub in Sri Lanka, as announced by India’s Ministry of External Affairs on Saturday.
The deal, which marks a major trilateral collaboration, was signed during Prime Minister Narendra Modi’s visit to Colombo — his first since Anura Kumara Dissanayake became Sri Lankan President in September 2024.
The proposed energy hub will be located in Trincomalee, a strategically located natural harbour on Sri Lanka’s eastern coast.
According to Foreign Secretary Vikram Misri, the project includes plans for a multi-product pipeline and potential use of a World War II-era oil tank farm, partially owned by the Sri Lankan subsidiary of Indian Oil Corporation (IOC).
Misri also emphasised the significance of the UAE's involvement: "The UAE is a strategic partner for India in the energy space, making it an ideal collaborator for this first-of-its-kind regional project. The specifics of their role will be clarified once business-level discussions begin."
The development is seen as part of India's broader strategy to counter China’s growing economic and strategic footprint in Sri Lanka. Notably, China’s Sinopec recently signed a $3.2 billion deal to construct an oil refinery in Hambantota, a southern port city already under Chinese operational control.
The energy hub agreement also comes as India continues to play a crucial role in Sri Lanka’s post-crisis recovery. Following the island nation's financial meltdown in 2022, India extended $4 billion in financial aid, and both countries have now successfully completed debt restructuring talks. Sri Lanka still owes approximately $1.36 billion to India's EXIM Bank and State Bank of India, according to data from its Finance Ministry.
During his visit, PM Modi also inaugurated a $100 million solar power project, a collaboration between the Ceylon Electricity Board and India’s National Thermal Power Corporation (NTPC).
In addition to the energy pact, India and Sri Lanka signed agreements on power grid connectivity, digital infrastructure, healthcare, and security, further deepening bilateral cooperation at a time when regional geopolitics are in flux.