Why data centres?

IN the aftermath of the hype overdrive that was the AI Impact Summit in Delhi, this question carries with it the risk of being called all kinds of names.

- By Prof. Rohan Samarajiva

But we must ask about Sri Lanka, a small country with a weak balance sheet.The Sri Lankan tech community has always prided itself in being at the cutting edge of technological adoption. I have heard many speeches about how we were the first to adopt mobile telephony, or something else. So, it’s understandable that the President’s proposal of making Sri Lanka a data center hub has resonated with those in the tech community.

But this is going to cost the taxpayer Rs. 500 million in 2026 ($ 1.6 million), with more in subsequent years. Is the proposal well thought out? Is it feasible? What benefits will flow from the Rs. 500 million plus to the economy?

Examples of tech misadventures

These questions were not answered in the case of previous Government proposals for glitzy technological leaps. In the case of the Sri Lankan satellite (ChiChiSat), I posed some questions to a representative of Surrey Satellite Technology Ltd., that was the ostensible partner at Telecom Regulatory Commission event in Mount Lavinia. Unsatisfied with the answers, I made my concerns public. In the end, SSTL was replaced by the Chinese. Good thing was that no public funds appear to have been spent.

The process was even murkier in the case of the broadcast tower built because Mahinda Rajapaksa saw one during his travels. In the end the Lotus Tower included no space for transmission, but ate up a lot of public money, including a Government guaranteed $ 88.6 million loan from China’s Exim Bank that must be paid off by July 2026. The income from current operations is not adequate to pay off the debt.

The Public Financial Management Act, No. 44 of 2024, seeks to preclude mindless expenditures such as the above. The present discussion will hopefully inform the review that is now mandatory for public investment projects such as data centres.

Rationale for data centres