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Sri Lanka revives port deal with India, Japan amid China concerns

Sri Lanka’s President Gotabaya Rajapaksa has announced the revival of an Indian and Japanese investment project to develop a deep-sea terminal in Colombo harbour, next to a controversial $500m Chinese-run container jetty.

Representative Image

A tripartite deal by Sri Lanka’s previous government had been on hold amid trade union resistance but Rajapaksa on Wednesday said the East Container Terminal (ECT) would proceed.

The approval came after reviewing “regional geopolitical concerns,” Rajapaksa’s office said, a reference to India’s suspicion of China’s role at the same port.

The terminal will be developed with 51 percent ownership by Sri Lanka’s government and the remaining 49 percent as an investment by India’s Adani Group and other stakeholders including Japan, officials said.

The state-run Sri Lanka Ports Authority (SLPA) entered into a memorandum of cooperation in May 2019 with Sri Lanka, India and Japan to develop the ECT before Rajapaksa came to power in November 2019.

The deep-sea jetty is located next to the Colombo International Container Terminal, which is 85 percent owned by China and was commissioned in 2013. The SLPA owns the remaining 15 percent.

India lodged protests when Chinese submarines made unannounced visits to the Chinese-managed terminal in 2014. Since then, Sri Lanka has refused permission for further submarine calls.

Nearly 70 percent of transhipment containers handled by Colombo was Indian export-import cargo.

In December 2017, Sri Lanka, unable to repay a huge Chinese loan, handed over another deep seaport in the south of the island to a Beijing company in a deal that raised concerns at home and abroad.

The $1.12bn deal, first announced in July 2016, allowed a Chinese state company to take over the Hambantota port, which straddles the world’s busiest east-west shipping route, on a 99-year lease.

India and the United States are concerned a Chinese foothold at Hambantota, 240km (150 miles) south of Colombo, could give it a military naval advantage in the Indian Ocean.

Sri Lanka has insisted its ports will not be used for any military purposes.

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