Saturday, April 20, 2024

More than Meets the Eye: Chinese Engagement in Sri Lankan Hydropower Project

“A journey in search of the Malwatu Oya is a journey to the heart of an ancient civilization” in Sri Lanka, says Dr. SinhaRaja Tammita-Delgoda, who discovered the historical context and brought out the beauty of Malwatu Oya in his documentary. Unfortunately, in the present day, her beauty and its surrounding environment will all be destroyed.

China is the world’s No. 1 earth dam builder, with a portfolio of 334 hydropower projects in 74 countries. The ‘Three Gorges’, the world’s biggest dam on the Yangtze River in central China, which forced the relocation of more than 1.4 million people, reflects the magnitude and the capacity of Chinese engineering and construction. Further, China’s ambition for a 60-gigawatt mega-dam on the Yarlung Tsangpo river in the Tibetan Autonomous Region (TAR) is clear evidence of China’s geopolitical ambition. The gigantic projects and alteration of the static geography are not without consequence; the recent earthquakes that devastated China are the consequence of being an energy-hungry nation. Currently, Sri Lanka is included in China’s earth dam-building portfolio.

What’s the Rush?

Should Sri Lanka be so desperate to develop dams to overcome the so-called water scarcity in the country, so much so that it enters into an agreement for its construction with any development partner on unsustainable terms? Should it rely on external loans with high-interest rates and high debt servicing? Should it award projects to developers who pay scant consideration to the social and green impacts of projects in the host countries and rehabilitation needs? The answer is a ‘big no’. The reasons are not far to seek.

Sri Lanka’s water scarcity made news recently after China CAMC Engineering Co. Ltd. (CAMCE) submitted an Expression of Interest (EOI) to undertake the implementation of the Lower Malawathu Oya Reservoir (LMOR) Project on engineering, procurement and construction (EPC) basis. CAMCE would seek direct funding from SINOSURE and the Bank of China. According to the EOI, the Chinese company would invest around USD 50 million for mini hydropower and floating solar power projects and establish cooperation in agricultural fields with downstream village communities. Under the LMOR Project, the Chinese intend to build infrastructure for irrigation, having an earth dam with a length of 3590m, a height of 23.5m and two canals of 3.1 km in total length.

Water Scarcity, Physical or Economic?

Sri Lanka’s so-called water scarcity is not about physical scarcity but is an economic scarcity. Keeping in mind the future social and economic development of the country, several studies have pointed out that some districts of Sri Lanka, especially in the relatively dry climatic zone, may confront the physical scarcity of water. At the same time, the wet zone could be exposed to the economic scarcity of water. Economic scarcity of water primarily occurs due to poor water management, including a lack of requisite infrastructure and human resources.

Here are the facts. Sri Lanka has ample water resources, with about 103 rivers flowing over a length of about 4,560 km and river basins spreading to about 90 percent of the country’s total area. Rainfall in the country is abundant, and it varies spatially between 800 mm to more than 5000 mm annually. Sri Lanka is well placed with an average rainfall of 2200 mm a year compared to India with 1100 mm and Australia with a mere 455 mm. Thus, the problem of so-called water scarcity in Sri Lanka is more of a failure in water management than natural deficiency or physical scarcity. Additionally, Sri Lanka has many man-made natural reservoirs, about 15,000 in number, connected to each other since immemorial. It also has annual renewable groundwater resources estimated at 7.8 km³.

Despite the abundance of water resources, Sri Lanka is exposed to water crises on and off, primarily due to spatial and temporal variability of water due to a bimodal rainfall pattern which causes uneven water availability, i.e., deficits and excess. The wet zone in Sri Lanka is located in the Central and South Western parts of the country, whereas the significant parts of Northern and Eastern Sri Lanka are arid and dry in varied degrees.

Both wet and dry zones in the country still have the potential to face water scarcity due to their specific needs. Sri Lanka’s wet zone is highly populated and characterized by semi-urban and urban centers, industries and commercial agricultural plantations, growing tea, rubber, coconut and cinnamon. Farmers in the dry zone are engaged mainly in paddy and seasonal crop cultivations using rainwater from the reservoirs. The country’s dry zone is estimated to account for more than 90 percent of current water withdrawals due to a higher share of irrigation demands.

However, the situation of economic scarcity of water in Sri Lanka is more dire than it is made out to be. The country has developed a vast network of reservoirs, dams, and canals that the Mahaweli Authority governs. The Ceylon Electricity Authority operates dams used for hydroelectric power generation. Hydroelectric dams, including small hydros, account for nearly half of the country’s installed capacity. The country has also developed many irrigation dams to distribute water via artificial canals and streams for agricultural purposes in the entire country. Taking all big and small dams, Sri Lanka has more than 30. It may need more to address spatial water inequality and seasonal variability in rainfall, but the situation is not compelling.

China’s Track Record on Dam Building

The second aspect of the LMOR Project is that Sri Lankan stakeholders are not convinced by the purported Chinese estimate that it would add benefits worth LKR 1 billion of crops and income to farmers or an assurance regarding its social and environmental neutrality. Already, the Buddhist monks are divided on the desirability and benefits of the project. Analysts and observers also point towards the Chinese track record of indifference to their projects’ social and green impacts in host countries and the lack of rehabilitation packages for the displaced.

The point is not that Sri Lanka should not prepare itself for perceived water scarcity in future, and the country also needs to improve its water management. Nevertheless, there are better options than seeking external funding for the LMOR Project when the country struggles to emerge from an unprecedented economic crisis. First, water scarcity in Sri Lanka is hyped more than it exists. Second, because dam construction has many issues to be assessed before proceeding to implement the project, especially its social and green accounting—in this respect, the multilateral agencies, their consultancy, and funding are more credible than China. It is proven from the experience of Myanmar in the case of the China-assisted Myitsone Dam and many other dams in African countries, some of which, including the former, had to be scrapped finally. For Sri Lanka, the China-assisted LMOR Project would also not be strategically an efficient decision as its close development partner India would not prefer Chinese footprints in Sri Lanka’s Tamil-dominated north situated proximately to India.

Sri Lanka should assess all these concerns before agreeing to the Chinese EOI. If the China-assisted project, which started in 2009, still needs expansion, it is necessary to have enough reason to accept the Chinese EOI and stakeholders. Colombo could wait until it weighs all options and finds the best funding and technical support option. Sri Lanka must improve its water management and invest in developing dams and canal networks. However, at this moment, the policymakers should focus on financial stability. Sri Lanka could wait until its finances improve, and after that, it should explore funding the project from indigenous capital or multilateral institutions. Balanced diplomacy also requires that anything that makes the northern development partner suspicious be done cautiously.

Author profile
Asanga Abeyagoonasekera

Asanga Abeyagoonasekera is a Senior Fellow at the Millennium Project in Washington DC and the author of Teardrop Diplomacy: ChinaSri Lanka Foray published by Bloomsbury (2023).

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