Reneging on a 2019 agreement with India and Japan, Sri Lanka has decided to develop the strategic East Container Terminal (ECT) at the Colombo Port on its own.
The Sri Lankan government would instead offer the West Container Terminal to India for possible investments, a senior government source told The Hindu.
The decision was taken at Monday’s Cabinet meeting helmed by President Gotabaya Rajapaksa, when members “unanimously” agreed to proposals submitted by the Minister of Ports and Shipping, the source said.
It comes amid mounting pressure from Port union workers against any foreign role or investment in the ECT project, where nearly 70% of the transhipment business is linked to India.
Asked about the development, a senior Indian source said: “We would hope that Sri Lanka does not unilaterally decide on this matter, as there is a tripartite agreement on it.”
For New Delhi, the strategic ECT project in Colombo has been high on priority.
It has figured in talks at the highest levels, including when External Affairs Minister S. Jaishankar visited in January. A week after his visit, President Gotabaya Rajapaksa told agitating Port worker unions that the Adani Group – Government of India’s nominee – would invest in the terminal, and that the Terminal would not be “sold or leased” to any foreign entity, signalling that his government was taking forward the 2019 Memorandum of Cooperation (MOC).
The Sri Lanka Ports Authority (SLPA) was to hold 51 % stake in the operations, while India and Japan together would hold 49 %, as per the MOC, which was signed by the former Maithripala Sirisena-Ranil Wickremesinghe administration.
However, amid growing resistance from port workers since, the ruling Rajapaksa government’s position appears to have shifted.
The first indication that Sri Lanka might keep India and Japan out of the deal came earlier on Monday, when Prime Minister Mahinda Rajapaksa told union representatives that the operation of the terminal would be “100 %” with the SLPA, because the “foreign company” did not agree to the proposals made by a committee appointed by the subject minister.
The PM’s remarks seem to have shocked the Indian side, as there has been no communication from Colombo that ongoing negotiations – held in person and virtually — had ended, according to sources. The remarks prompted a media statement from the Indian High Commission for the first time since the controversy heightened. A spokesman of the Indian mission on Monday reiterated “the expectation of the Government of India for expeditious implementation” of the trilateral MOC signed among Sri Lanka , India and Japan in May 2019, for the development of ECT with participation from the three countries. “The commitment of the Government of Sri Lanka in this regard has been conveyed several times in the recent past, including at the leadership level…all sides should continue to abide by the existing understandings and commitment,” the statement had said, hours before the Cabinet decided otherwise.