The Colombo port issue

  • After strong opposition from trade unions across the country, Sri Lanka has unilaterally pulled out of a 2019 agreement with India and Japan for developing the strategic East Container Terminal (ECT) at the Colombo Port.
  • It announced that the ECT would be developed and operated as a “wholly owned container terminal of the Sri Lanka Ports Authority (SLPA)”. 
  • India’s response was that Colombo should not be taking a unilateral decision on an existing tripartite agreement.
THE 2019 AGREEMENT
  • In 2019, India and Sri Lanka signed a memorandum of understanding for “co-operation on economic projects”. 
  • The development and operation of the container terminal was one of the projects in the MoU. 
  • As per a Memorandum of Co-operation signed by the previous Maithripala Sirisena-Ranil Wickremesinghe administration, the Sri Lanka Ports Authority would have 100 per cent ownership of the ECT. 
  • The Terminal Operations Company (TOC) conducting all East Container Terminal operations was to be jointly owned, with Sri Lanka retaining a 51% stake, and the joint venture partners 49%/.
  • But Sirisena was opposed to an Indian stake in the ECT project.
  • Just before the 2020 elections, port workers striking against the agreement ended their protest only after (now Prime Minister) Mahinda Rajapaksa assured them that there would be no Indian involvement in the port.
COMPENSATION
  • After this decision, a cabinet meeting approved a proposal to develop the West Terminal at the Colombo Port as a Public Private Partnership with India and Japan.
  • This was seen as a bid to compensate for taking away the ECT.
  • The Sri Lankan side believes it can persuade India and Japan that the West terminal is strategically no different from the East, and commercially even better.

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