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Adani Group itself suggested port terminal change to resolve protests: Sri Lankan minister

Sri Lankan minister Godahewa says Adani Group offered to invest in West Container Terminal, a 'commercially better option', but with same equity ratio given to China at CCIT.

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New Delhi: The row has intensified and diplomatic relations have frayed ever since Sri Lanka unilaterally cancelled an agreement with India and Japan over the East Container Terminal (ECT) of Colombo port.

Now, a Sri Lankan minister has added a new twist to the controversy by claiming that the main Indian investor, the Adani Group, has itself indicated that it would be willing to put its money in the West Container Terminal (WCT), since it could be a better commercial prospect.

“We were on the verge of a national crisis because trade unions were threatening a national strike, if the Memorandum of Understanding (MoU) for the ECT is not cancelled,” said Nalaka Godahewa, state minister for urban development.

“We asked them (Adani Group and its local partner John Keells) for other options. They themselves asked us whether we could look at WCT, but, with the same equity ratio (85%:15%) that was given to China to develop the Colombo Cargo Container Terminal (CCIT) of the port. Commercially, it would be a better option, they said.”

The project came under opposition pressure in Sri Lanka ahead of the parliamentary polls in the country in July 2020. Sri Lanka had at the time assured India that New Delhi and Japan would get the go-ahead after the elections to develop the project, but it had to be “expedited” as it was crucial for all stakeholders.

Also read: Sri Lanka’s economic past isn’t very bright. Scrapping deals with India won’t help its future

Indian officials furious 

Godahewa is also a member of Viyath Maga, which he describes as an “independent group” of professionals who supported powerful President Gotabaya Rajapaksa during his election campaign before coming to power in 2019.

Godahewa says he acted as an informal interlocutor for Rajapaksa to address swelling discontent amid port workers, influential Buddhist monks and various unions threatening to go on strike, if the President did not come good on a promise in his election manifesto, to cancel the deal with India and Japan.

“It was the previous government which had signed the MoU with India and Japan for the ECT,” points out Godahewa, who helped draft Rajapaksa’s manifesto. “In our manifesto, we promised voters that the ECT will be developed by Sri Lanka alone, and that the WCT will be given out on public-private partnership basis to foreign investors instead.”

It is that election promise, Godahewa claims, that the striking workers wanted President Rajapaksa to come good on.

However, Indian officials are furious and not buying that story.

“Have you noticed that most of these protesting groups — even the Buddhist clergy — are somehow affiliated to the Government of Sri Lanka itself? So, they are in no way a political opposition, as is being suggested,” said a high-ranking Indian official.

The official pointed out that after the MoU for the ECT was signed in May 2019, initial discussions had revolved around managing the ECT along the same equity divide (85%:15%) as China was given at the CCIT.

“Discussions picked up again last year. Then, protests began and there was suddenly the proposal that the Sri Lanka government retain 51% and offer only 49% to us foreign investors. We told them that the ECT would then become a state-run entity and turn private investors off. We also said that it is silly to have different templates for different terminals at the same port, so we suggested we keep talking.”

Though the pandemic caused a slight lull, negotiations commenced again in January this year, when India’s External Affairs Minister S. Jaishankar flew to Colombo.

“Things were making progress,” the official said. “Then suddenly on February 1, we heard that the Sri Lankan PM had called a meeting of trade union workers at his place. The same evening, a cabinet note was written and approved. So, within 2-3 days, Sri Lanka went from negotiations on the ECT to shifting the entire goalpost to another terminal altogether!”

Be it whichever terminal, Indians are riled by several issues and point to the “hypocrisy” of the claim that Sri Lanka’s sovereign interests alone are dictating these moves.

In addition to Colombo’s CCIT, China was also given controlling equity and a 99-year lease on the Hambantota port on the south-eastern coast of Sri Lanka, and also 15,000 acres of adjacent farmland to develop a Special Economic Zone (SEZ). The area saw relentless protests from local farmers. Yet, Sri Lanka did not renege on that deal.

“So the big question is, if that equity share was possible for China, why not with India and Japan over the ECT?” asks the Indian official.

Sri Lanka’s Godahewa, however, said it was only after the Adani Group itself gave his government the idea of the WCT in lieu of the ECT, that he went to talk to the 23 unions on strike.

“We were finally able to get their consent for a proposal, that India and Japan could be given the same terms as China at the CCIT, if they take the WCT in lieu. All except one gave their consent in writing, it was a breakthrough and the strike has been called off,” he said.

Also read: What’s the Colombo Port project Jaishankar’s likely to push for & why it remains stalled

India-Sri Lanka relations — past and present 

However relieved Colombo may claim to be over the end of the ‘strike’, the cancellation of the MoU has seriously dented bilateral relations between India and Sri Lanka.

During India’s era of Congress-led coalitions, the elephant in the room was Tamil Nadu. It is predominantly because of pressure from Tamil Nadu political groups that faraway New Delhi got involved in Sri Lanka at all.

India first treated Tamil separatist groups in Sri Lanka’s north and east as ‘freedom-fighters’ and gave their leaders free military training in India. Velupillai Prabhakaran, the head of terror outfit Liberation Tigers of Tamil Eelam (LTTE), was even an honoured state guest at the Ashoka Hotel in New Delhi.

When the LTTE revealed its true colours and a bloody civil war erupted in Sri Lanka, India tried to “keep peace” by sending troops — to disastrous effect. India also co-authored the so-called 13th Amendment to the Sri Lankan constitution to push for maximum autonomy for Sri Lanka’s Tamil provinces. However, Rajiv Gandhi’s assassination by an LTTE suicide bomber in 1991 shook New Delhi out of its fuzzy logic.

In 2009, Sri Lanka’s 30-year-long civil war ended. Nearly 120,000 people had been killed. The LTTE leadership including Prabhakaran was decimated, though nearly 12,000 of its top cadres escaped to western countries.

The then Manmohan Singh government in New Delhi may have wanted to turn over a new leaf with Colombo and even help end the war (as China and Pakistan willingly did), but it was too late by then. Coalition pressures from Tamil Nadu forbade New Delhi from doing so.

Overall, India’s Sri Lanka policy continued to treat the island nation’s minority Hindu Tamils as the only community of any relevance, not its Buddhist majority Sinhalese. Little wonder that public distrust of India and Indians was at its peak across Sri Lanka.

Free from coalition pressures, the Narendra Modi government began setting things right.

PM Modi, more than anyone, was expected to keep up the “Hindu brotherhood” narrative. Instead, he got off the mark in pragmatic fashion. He attended a world conference to commemorate Gautam Buddha’s birthday in Colombo and spoke of the relevance of Buddhism. He travelled to (Tamil) Jaffna to give away houses built by India and attended Hindu milk boiling ceremonies to inaugurate them.

Modi remained largely silent over the many thorny issues that rile Sri Lankans — the 13th amendment, the Ramayana pilgrim trail and worst of all, the Sethusamudram bridge across the Palk Straits that had been inaugurated by Dr Manmohan Singh and Sonia Gandhi with much fanfare but was later stayed by courts.

Modi’s refusal to harp on cultural cousinhood and the steady stream of high-ranking visits to Colombo by Indian officials began to slowly but surely push up India’s approval ratings in Sri Lanka.

“There were a lot of misunderstandings on both sides,” Sri Lankan President Gotabaya Rajapaksa had told this writer in an interview for The Hindustan Times, just a week after his inauguration in November 2019. “We have to put those behind and move forward. And with PM Modi, I think it is possible.”

Barely had the pandemic begun to taper off that Jaishankar made yet another trip to Colombo last month. Finally, 500,000 coronavirus vaccine doses were dispatched by India to Sri Lanka.

But within a week, Sri Lanka took its unilateral decision over the ECT at Colombo Port and things fell apart.

At least 70 per cent of India’s shipping traverses Colombo port. It is located at a crucial junction of the busiest shipping lanes in the world. It is one of the most coveted pearls of China’s controversial Belt and Road Initiative (BRI). And, Sri Lanka is one of the most heavily indebted, cash-strapped nations in the world with an overall external debt of US$ 51.6 billion (Sept 2020), of which it officially owes 10 per cent to China alone.

Little wonder then, that China has begun to twist Sri Lanka’s arm over its relations to the United States, Japan and India, all three countries that contest China’s aggressive territorial claims across the Indo-Pacific Region.

In October last year, former US Secretary of State Mike Pompeo announced the opening of a US embassy in the Maldives, though the archipelago’s consular issues were always managed by the US mission in Colombo. In an obvious reference to China’s alarming sprawl across the Indian Ocean, including and especially Sri Lanka, Pompeo tweeted of the need for a “free, open and rules-based Indo-Pacific region”.

Two months later, the Washington-based Millennium Challenge Corporation (MCC) announced the discontinuation of its US$ 480 million grant to Sri Lanka, citing a ‘lack of partner country engagement”.  Though it is true that such grants come with a lot of political-strategic “baggage”, there is no doubt that cash-strapped Sri Lanka could have done with every available financial injection.

A light rail project that Japan was to build in Sri Lanka, was cancelled suddenly. Japan is said to have learned of the decision only through the media.

Also read: India will always be dependable partner & reliable friend of Sri Lanka, says Jaishankar

‘All we want is a win-win situation’

At the time of filing this article, India, too, was yet to receive formal intimation of the cancellation of the MoU over the ECT and of any offer of the West Container Terminal to India (and Japan), in lieu.

“When I met our interlocutors at senior level at the Government of Sri Lanka after these latest developments earlier this week, I was told about the decision taken by the cabinet of Sri Lanka on February 1,” said Gopal Baglay, India’s High Commissioner to Sri Lanka. “By then, it had already been reported in the media.”

Political observers in Colombo say there is now anxiety over whether India will back Sri Lanka at the United Nations Human Rights Council (UNHRC) in Geneva in barely two weeks from now — when a long-awaited report on Sri Lanka’s investigation into alleged human rights violations at the end of its civil war is presented, and a fresh and damning resolution against Colombo possibly introduced.

Other than Chinese pressure as the reason for the sudden cancellation of the MoU with India, a Colombo-based political editor also pointed to other issues that could have influenced the unilateral decision.

Rumours of a rift between President Gotabaya Rajapaksa and his brother, Prime Minister Mahinda Rajapaksa (whose own earlier presidential tenure saw the China deals reach fruition), for one, won’t die down.

And though shipping experts dismiss the comparison, others suggest that the WCT, which Sri Lanka says it will now offer India, is inferior to the ECT in many ways and unlikely to be accepted by India.

Still, interlocutor Nalaka Godahewa is anxious to let India know that his country is “extremely thankful for the support it has received from the Narendra Modi government over numerous issues”.

“By no means do we want to push India to a side,” Godahewa said. “I believe that the two governments will resolve this issue diplomatically. All we want is a win-win situation.”

(Padma Rao Sundarji is a foreign correspondent who covered the Sri Lankan civil war on the ground for several decades. She is author of “Sri Lanka: The New Country”, HarperCollins 2015)

Also read: LAC tension, debt deferment, Colombo port project figure in Modi, Rajapaksa virtual talks


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  1. Thank you Modiji for putting National Interests above religious interests. We know you always do that.
    As a subscriber to the Print, I am glad to see such unbiased pieces written.

  2. It seems that India’s foreign policy is also run by Mr Adani. After all Modi probably
    trusts Adani more than our foreign policy mandarins, specially when kickbacks are
    involved. After all a number of retired foreign service officers, who have been quiet
    so far, spoke out pro Modi very recently.

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