Foreign Direct Investments in the Energy Sector: Implications for Sustainable Economic Development in Sri Lanka

Yothini Selvananthan
State Counsel, Attorney General’s Department
Visiting Lecturer Department of Law, University of Jaffna

Sri Lanka is bestowed with renewable natural resources and non-renewable resources, which could attract foreign investment in the energy sector. Such investments are likely to spur further investment, since many investors would prefer to invest in countries with abundant energy sources to meet their domestic energy demands and to ensure energy security within the domestic sphere. While ensuring self-sufficient energy production through foreign investment, the sustainability of these resources should also be ensured. The development of Sri Lanka is closely linked to its ability to achieve sustainable energy security. The present study aims to analyse the factors that promote foreign direct investment (FDI) in the energy sector while ensuring sustainable development. It is hoped that the outcome of this study could be used by policy-makers and academics in Sri Lanka to tailor policies, laws and strategies to attract foreign investment in Sri Lanka’s energy sector, whilst achieving sustainable development.

The paper utilizes a comparative research methodology across identified jurisdictions. It will focus on India, Brazil, and Pakistan to gather data on investment patterns, policies, and regulatory frameworks in terms of sustainable development. The legal regime in those jurisdictions, such as laws, regulations and guidelines, will serve as primary sources. Academic journals, research papers, reports, and relevant publications which shed light on the existing January 2024 knowledge on FDIs in the energy sector and their effects on national economies and natural resources constitute secondary sources. The paper recommends that the government enact policies to ensure the availability of energy and the efficient use of energy within the country. Finally, the paper concludes that FDI could be used as a catalyst to improve the energy sector, but it shall be the duty of government to ensure that investment policies comply with the notion of sustainable development.