East Container Terminal: India should succeed
View(s):Sri Lanka is likely to go ahead with the arrangement between the Indian terminal operator Adani and partner Japan in the best interests of all parties.
India and Japan are parties to a Memorandum of Cooperation (MOC) signed with the Sri Lanka Government in March 2019 in a bid to run the East Container Terminal (ECT) on a 49/51 shareholding respectively.
While Colombo Port was marred with protests by trade unions with nationalistic mindsets this time however some of the placards that went up against the handover of the ECT were mainly part of an orchestrated drama and pre-election stunt, informed sources said.
The government is likely to go ahead with the signing of the ECT terminal operations with the related parties as planned and as revealed in a Cabinet paper that stated the government will go ahead with the MOC entered into but on the request that Japan joins as an investment partner.
Sources indicate that India moving in would be advantageous as there could be more “harmony” between the two states if the MOC arrangement continues.
Further the consolidation of India’s position in the Indian Ocean is currently becoming relevant under the growing threat of China’s monopoly in the region.
China already has a marked presence in Sri Lanka with the ability to dock even warships at the Colombo Port’s Colombo International Container Terminal (CICT) or even the Hambantota Port; sources say indicating that India feels that no kind of assurance from Sri Lanka could ease their mind of this looming threat from China. Sources alleged that there had been warships calling over from time to time.
Political sources indicate that security of the region is likely to be impacted if India does not have its way.
Adani Ports will be the terminal operator proposed by the Indian government and this would be relevant to Colombo port since Sri Lanka will be seeing further competition from India’s Kerala port in Vizhinjam which Adani has been constructing since 2015.
The Colombo Port handles a large volume of transhipment business out of which 70 per cent is headed for India. This could be lost if according to Indian sources taxes could be charged on goods that come via Colombo in future in a bid to divert more volumes to Vizhingham. This upcoming port at Vizhingham and the ECT are both deep water terminals with a draft of 18-metres that could handle some of the larger vessels crucial in today’s shipping business.
Sri Lanka which has already obtained a US$400 million currency swap from the Reserve Bank of India has also requested for a further $1.1 billion currency swap that is under consideration.
President Gotabaya Rajapaksa had requested for this additional currency swap and asked that the Indian Prime Minister “direct those responsible from India’s side to expedite construction of the east terminal of the Colombo port as soon as possible,” Sri Lankan President’s office had reportedly stated, India’s Economic Times reported in May.
Indian Prime Minister Narendra Modi had indicated their continued support to “our close maritime neighbour” in dealing with the pandemic and its economic impact, the report also said.
In addition, Sri Lanka will be obtaining a commercial loan of $100 million from India for solar energy and assistance is also been granted for the Northern railway line.