DAILY NEWS ANALYSIS

GS-II : International Relations Sri Lanka

03 February, 2021
12 Min Read

India Sri Lanka ties: East Container Terminal at Colombo Port

In a flurry of meetings a day after Sri Lanka backed out of an agreement with India and Japan to develop the East Container Terminal (ECT) at the Colombo Port, Indian High Commissioner Gopal Baglay met President Gotabaya Rajapaksa, Prime Minister Mahinda Rajapaksa and Foreign Minister Dinesh Gunawardena.
In the India – Sri Lanka ties, India was of the view that Colombo must adhere to its commitments in the tripartite agreement of May 2019, to jointly develop the strategic terminal with the Sri Lanka Ports Authority (SLPA) holding a 51% stake and India and Japan holding 49% together.
The Adani Group from India, along with Japanese companies, was to invest in the project expected to cost up to $700 million, as per official estimates.

Mixed signals

The Indian side, it is learnt, conveyed that the signals emanating from Sri Lanka should boost the confidence of potential investors.
President Gotabaya Rajapaksa has pledged to draw foreign direct investments to the country, rather than take loans.
The three high-level meetings follow the Sri Lankan government’s cabinet decision, in the wake of raging protests by port workers’ unions opposed to foreign investment in the facility, that the operation of the ECT would be “100%” with the SLPA, while the West Container Terminal would be offered to India instead, on a 35-year arrangement for development.
This is the second instance of Sri Lanka reversing an agreement on a large infrastructure project involving Japan, after the government scrapped the $1.5 billion, Japan-funded Light Rail Transit system last year.
The development has sparked alarm in India and Japan, according to diplomatic sources, who said Sri Lanka had neither conveyed its decision nor offered an alternative proposal to either of the partners.
Asked how Sri Lanka would mobilise funds to develop the SLPA, especially after the economic impact of the pandemic, Udaya Gammanpila, a Cabinet spokesman, on Tuesday said, “SLPA is going to use its own funds, as well as borrow money from local commercial banks.”
On whether Sri Lanka had discussed the option of developing the West Container Terminal with India, he said, “This is a sensitive diplomatic issue. Sri Lanka is always keen to maintain cordial diplomatic ties with India. Sri Lanka has commenced discussions with the Government of India, but I don’t think this is the stage to disclose those details.”
While the ECT, which is in its first stage and awaits upgrade, has a 450-metre-long quay wall and water depth of 18 metres, equipping it to accommodate large vessels, the West Container Terminal (WCT) exists merely as a proposal, with no infrastructure yet.

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Source: TH

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