New Delhi: The Mahinda Rajapaksa government in Sri Lanka may have shelved the East Container Terminal (ECT) project at Colombo Port, but India believes Sri Lanka cannot backtrack after assuring New Delhi last year that it will kick-start the project once the parliamentary elections get over, ThePrint has learnt.
According to top official sources, New Delhi has discussed the matter with Japan as well since it is a joint collaboration. The tripartite agreement was signed by the former Maithripala Sirisena administration with India and Japan.
The project came under opposition pressure in Sri Lanka ahead of the parliamentary polls there last year in July. But Sri Lanka had assured India at the time that after the elections were over, New Delhi and Japan would get the go-ahead to develop the project, but it has to be “expedited” as it is crucial for all stakeholders.
But even after a landslide victory in August 2020, the Rajapaksa government did not resume the project.
Sources said India will now “watch the situation” before taking an official decision. New Delhi is also in talks with Colombo to reconsider its decision, they added.
On Monday, the Sri Lankan cabinet decided to scrap the agreement on the ECT project and instead sought investments from India and Japan to develop the West Container Terminal of the Port of Colombo under a public-private-partnership model, and “return” it to Sri Lanka “within 35 years”.
India is studying the new proposal and discussing the same with Japan even as it believes that Sri Lanka might reconsider its decision and “things can change any moment”, sources said.
Sources also said the Rajapaksa government has acted at the behest of the Colombo Port trade unions, who believed the Sri Lankan government is selling off a “national asset” to India. Sources further said the trade unions are being fuelled by “other forces”, referring to China.
The cabinet decision is yet to be formally communicated to New Delhi and Tokyo, sources added.
The $500-million ECT development project has been stalled since 2016 due to internal political turmoil in Sri Lanka.
In May 2019, India and Japan signed the Memorandum of Cooperation (MoC) with the Sri Lankan government to develop the terminal at the Colombo Port, which is also on the map of China’s Belt and Road Initiative.
The MoC stated that the Sri Lanka Ports Authority will have the control and ownership of the project with 51 per cent stake, while India and Japan will jointly own the remaining 49 per cent stake.
But after the Rajapaksa government came to power, the project suffered another setback when President Gotabaya Rajapaksa decided to undertake a review of the project in July 2020 ahead of the parliamentary polls there owing to stiff opposition from labour unions.
The Narendra Modi government, which shares cordial ties with both the Sri Lankan President as well as Prime Minister Mahinda Rajapaksa, had been pushing for a quick implementation of the project.
It was decided that the ECT will be developed by the Adani Group, for which the company had also signed a preliminary agreement in 2019.
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India’s concerns
India’s concern over the Colombo Port project stems from what had happened at Hambantota Port. Sri Lanka had taken massive loans from China, which it could not repay, leading to Beijing taking control over the port under a 99-year lease for debt relief in 2018.
The ECT project was also discussed during External Affairs Minister S. Jaishankar’s visit to Sri Lanka on 5-7 January.
On 22 January, Anurag Srivastava, spokesperson, Ministry of External Affairs, said, “…We’ll be happy to see the development of the East Container Terminal through investments from India and Japan as is preferred by the current Sri Lankan government.”
The island nation has become strategically crucial for India even as it aims to expand the objectives under the Indo-Pacific initiative. In November last year, National Security Advisor Ajit Doval had visited Sri Lanka to participate in the trilateral maritime cooperation with India, Maldives and Sri Lanka.
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