Friday, June 14, 2024

Did India Reject The ‘Alternative Offer’ As Sri Lanka Allows Its State-Run Body To Develop Key Port Terminal?

Did India reject the alternative offer from Sri Lanka as the island nation’s cabinet unanimously approved that the east terminal of the Colombo Port would be developed solely by the state-run Sri Lanka Ports Authority (SLPA)?

Reports suggest India was given a compensatory offer to build the west terminal of the port.

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According to The Indian Express, the island nation’s government has approved a proposal to develop the west container terminal (WCT) of the Colombo Port on a public-private partnership basis with Japan and India after deciding to go solo on the east terminal.

Sources told the news daily that the Indian response to the compensatory offer was “ambiguous” and “almost rejecting”. However, Indian officials have said there was no formal communication about WCT till Tuesday noon.

Officials, according to the report, have said the west terminal offer is better for India from a commercial perspective as it gives an 85% stake for developers of the west terminal compared to the 49% in ECT. Prime Minister Mahinda Rajapaksa’s Sri Lanka Podujana Peramuna (SLPP) party had faced strong opposition from trade unions, which were against the involvement of any foreign country in the ECT project.

Colombo Port

The ECT project in Colombo was high on priority for India. Rajapaksa, following India’s External Affairs Minister S Jaishankar’s visit to the island nation in January, had given the green light to the India-backed port project in Colombo. He had assured the trade unions that “the ECT will not be sold or leased” as they have been resisting any foreign involvement in the ECT.

According to the tripartite agreement signed in 2019, India and Japan were to hold a 49% stake in ECT. Earlier reports suggested India’s Adani Group was supposed to invest in the east terminal and the Sri Lanka Ports Authority (SLPA) was to hold a 51% stake in the operations.

Speaking to Indian news channel Wion, a Japanese embassy official in New Delhi has expressed regret at the unilateral decision taken by Sri Lanka. Meanwhile, India has not given any formal reaction on the development but an Indian source has told The Hindu: “We would hope that Sri Lanka does not unilaterally decide on this matter, as there is a tripartite agreement on it.”

Experts have pointed out that Sri Lanka’s decision may impact the island nation economically as it was trying to revive the economy amid the Covid-19 pandemic. It had sought a $2-billion financial lifeline from New Delhi. The government, as per the reports, was seeking a $1 billion currency swap and a $1 billion debt moratorium from India.

India has promised to support Sri Lanka in reviving its economy but analysts fear the latest decision might change things if the compensatory offer doesn’t work.

There were also reports indicating the Chinese role in instigating the trade union protest as no such resistance was recorded when China was investing in the port project in the past.

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