India, Japan back in another Sri Lanka port project

Private investors to develop West Container Terminal at Colombo Port

A view of the East Container Terminal at the Colombo Port. File

Sri Lanka on Tuesday said it will develop the West Container Terminal (WCT) at the Colombo Port along with India and Japan. The decision comes a month after the Rajapaksa government ejected the two partners from a 2019 tripartite agreement to jointly develop the East Container Terminal (ECT), citing resistance to “foreign involvement”. 

Addressing the media on decisions taken at Monday’s Cabinet meeting, spokesperson Keheliya Rambukwella said approval had been granted to develop the WCT with investors nominated by India and Japan. While the High Commission of India had “approved” Adani Ports , which was to invest in the ECT project earlier, Japan is yet to name an investor, according to officially published Cabinet decisions.

Sri Lanka, Japan, India sign deal to develop East Container Terminal at Colombo Port

Neither India nor Japan has officially commented on the offer, or on the said private investment from the countries. According to official sources in New Delhi, Colombo had been in talks directly with potential investor Adani Group, while the government “was not part of” the discussions. 

Further, official sources in Colombo expressed surprise at the mention of the Indian High Commission in the Cabinet decision, pointing out that it was the Government of Sri Lanka, and not a foreign mission, that would “approve” investments coming into the island nation. 

Both India and Japan had earlier expressed displeasure about Colombo “unilaterally” pulling out of the 2019 tripartite agreement, signed by the former Maithripala Sirisena-Ranil Wickremesinghe government. The February 1 decision came amid mounting opposition from port worker unions and sections of the clergy to “foreign involvement” in the country’s national assets. 

The Rajapaksa government has offered India and Japan the WCT as an alternative, allowing higher stakes. In the ECT project agreed upon earlier, the Sri Lanka Ports Authority (SLPA) was to hold majority 51%, but in the WCT proposal, India and Japan will be accorded 85% stake, as is the case in the nearby Colombo International Container Terminal (CICT), where China Merchants Port Holdings Company Limited holds 85%, the government said. 

Asked how authorities had convinced the unions of foreign investment at another terminal in the same port, Mr. Rambukwella said their opposition was specific to the ECT, which was partially in use. The ECT already has a 600-metre quay wall, and is adjacent to a shallow terminal, allowing swift cargo transfers. The terminal’s further development, which is now to be undertaken by the Sri Lanka Port Authority (SLPA), is aimed at augmenting operations at an estimated cost of upto $700 million. 

The West Container Terminal, however, has to be built from scratch, requiring a much higher investment. 

“The return on investment has not been envisaged yet,” Mr. Rambukwella said. 

The WCT is adjacent to the China-run CICT and just a couple of kilometres away from the China-backed Port City being built on reclaimed land, making it a strategically desirable spot for India, whose concerns over China's presence in Sri Lanka are well known. 

Colombo’s alternative offer also comes at a time when Sri Lanka is seeking support at the ongoing UN Human Right Council session, where a resolution on the country's rights record will soon be put to vote. The government recently wrote to Prime Minister Narendra Modi. 

Asked if the two developments were linked, Mr. Rambukwella said they were “two different areas — one is commercial, other one, more of international relations.” However, on the resolution, he said: “I think India would stand with the right group, and take correct measures to support us, that is our belief.”