SIMIC

China says it has every right to run the Colombo International Container Terminal (CICT) and the Hambantota Port besides, and wants no interloper from India and Japan, who seek a stake in the planned Eastern Container Terminal (ECT).

India's stated case is that 60 to 70 per cent of the Colombo Port's business is accounted for by Indian transshipment and therefore, India should have a stake in the running of the port, said the report.

But the unstated but equally important case is that India needs to stem China's intrusions into Sri Lanka's economy and that a presence in the Colombo's ECT will enable it to watch the Chinese ensconced in the CICT next door.

Since China considers the CICT and the Hambantota Port as being part of Xi Jinping's flagship project, the Belt and Road Initiative, India is aiming at getting Sri Lanka to be part of the US-India-Japan-Australia "Quad".

For the "Quad" to be meaningful, India or Japan will have to have a place in the Colombo Port. India has already made Sri Lanka host a Secretariat to coordinate the activities of the Indian Ocean trilateral maritime defence system involving Sri Lanka, the Maldives and India.

But Sri Lanka has become wary about handing over national assets like ports to foreign entities after the controversial leasing out of the Hambantota Port in 2017 to Chinese state-owned, but Hong Kong-based China Merchants Ports on a 99-year lease for US$1.2 billion.

The incumbent Sri Lankan regime headed by the Rajapaksa family is highly nationalistic and suspicious about foreign involvement in projects with national security implications.

During presidential and parliamentary elections in 2019 and August 2020, the Sri Lanka Podujana Peramuna (SLPP) headed by the Rajapaksas, had pledged to develop and run the ECT without foreign control.

But strapped for cash, the government also faces congestion in the Colombo Port which must be relieved by urgent port expansion, a situation made worse by a 30 per cent fall in the workforce due to the Covid crisis, said the report.

There has also been a backlog of 50,000 TEU with 23 ships waiting to enter the harbour on an average, said Rohan Masakorala, CEO of Shippers' Academy Colombo. "Vessels were also bypassing the port and shippers had begun to feel the absence of the ECT.

"If we had operationalised the ECT, the current congestion and crisis would have been minimised or averted. The transshipment volumes would have not dropped by five per cent to six per cent. Instead, with trade recovery, we could have grown four per cent. The opportunity cost has been over 10 per cent," Mr Masakorala said.

The ECT was conceived seven years ago but the first move to set it up with foreign collaboration was made in 2015. The then pro-western and pro-Indian Sri Lankan Prime Minister Ranil Wickremesinghe decided to give its development to the Sri Lanka Ports Authority (SLPA) and an Indian company.

It was rightly felt that involvement of a foreign shipping company or ports operator was necessary to get business for the Colombo Port. However, all bidders were disqualified by a cabinet committee under pressure from nationalist President Maithripala Sirisena.

Concerned that the pro-China Rajapaksa regime would come under China's control, India increased pressure. But an SLPP-inspired dockers' union struck. Eventually, Prime Minister Mahinda Rajapaksa secured labour peace on assurances that national sovereignty would not suffer.

When the coronavirus epidemic crippled work in all the terminals of the Colombo Port, the Government came under increased pressure from shippers and traders to implement the May 2019 MOU on the ECT urgently.

On December 22, SLPA chairman Daya Ratnayake denied that the government has approved a proposal to allow an Indian company, the Adanis, to develop the ECT. He said that the Cabinet has appointed two committees to evaluate all the proposals made in regard to the ECT.

Keeping the door open to India, Ratnayake pointed out that 61 per cent of the total 82 per cent transshipment business was generated from India and said: "If an Indian company gets involved, we can retain and expand our current businesses by attracting large shipping lines and volumes from India. We should remember that there are a lot of ports in our region and there is severe competition."