Sri Lanka Signals Exit from MOC with India on Colombo Port

Sri Lanka Signals Exit from MOC with India on Colombo Port

Prime Minister Mahinda Rajapaksa's office said on Monday that his government has chose to run the Colombo Port's Eastern Container Terminal (ECT) as a fully-owned operation of the state-run ports authority, prompting India to demand Sri Lanka to abide by its commitment of the trilateral deal with it and Japan to jointly develop the strategic cargo terminal.

"The congratulatory letter is in continuation of regular interactions between India and Sri Lanka at the leadership level which has resulted into significant strides in the field of development cooperation, trade and economic ties, people to people contacts despite the challenges posed by the COVID-19 pandemic", the High Commission said.

"The decision taken today will not be limited to words but action as well", said Prime Minister Rajapaksa.

But India has remained steadfast about the project during high-level discussions, including during a visit last month from External Affairs Minister Subrahmanyam Jaishankar.

The Sri Lankan Cabinet had on Monday unanimously approved that the East Terminal of the port would be developed exclusively by the Sri Lanka Port Authority (SLPA).

Beijing took over Hambantota port in the south of the country in 2016 after Sri Lanka failed to keep up with debt repayments, and is involved in the construction and operation of a neighbouring port terminal in Colombo, as well as other critical infrastructure. The Indian High Commission in Colombo has called on "all sides" to "abide by the existing understandings and commitment".

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But on February 2, Sri Lanka's government declared the East terminal "a wholly owned container terminal of the Sri Lanka Ports Authority".

The deep-sea jetty deal was signed in May 2019, a few months before President Gotabaya Rajapaksa came to power.

A week after his visit, Sri Lankan President Gotabaya Rajapaksa said the east terminal would be developed as an investment project of which Sri Lanka would own 51%.

More than 70% of business is from ships making their way to Indian coast from the Colombo port, which made the deal important for Sri Lanka as well.

Sri Lanka has pushed Japan and India out of a port project in its capital of Colombo, opting instead to move forward alone, amid pressure by unions at the facility. Labor unions at the port had objected vehemently to the deal, with more than 20 launching a strike previous year and threatening another in late January.

Internal politics played a major role in the decision. The Mahinda Rajapaksa-led Sri Lankan government, which is facing threats of countrywide protests against port privatisation, had inked the pact with India and Japan in 2019.

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