Sri Lanka entered into a partnership with India and Japan on Tuesday, 28 May, to develop a deep-sea container terminal next to a controversial Chinese-run container jetty in Colombo harbour, NDTV reported.
Known as East Terminal of the Colombo port, the Sri Lanka Ports Authority (SLPA) was quoted by NDTV as saying that a memorandum of cooperation (MOC) had been signed between the three countries for the development of the port. A Memorandum of Understanding (MoU) will reportedly be signed soon.
While Sri Lanka will retain 51 percent of the company that will run the terminal, the rest will be owned by India and Japan.
WHAT IS THE STRATEGIC IMPORTANCE?
The Port of Colombo has attracted major investment from China under its Belt and Road Initiative (BRI).
The terminal will be built next to a controversial $500-million terminal called the Colombo International Container Terminal (CICT), 85 percent of which is owned by China and 15 percent by the SLPA.
NDTV quoted SLPA as saying that 70 percent of transhipment containers handled by Colombo was Indian export-import cargo.
INDIA AND US’ GROWING CONCERNS OVER HAMBANTOTA PORT
Sri Lanka borrowed heavily to build the nine-year-old Hambantota port but couldn’t repay the loans, and then gave China a 99-year lease for debt relief.
India and the United States are both concerned that a Chinese foothold at Hambantota could give it a military naval advantage in the Indian Ocean.
WHAT WILL BE THE COST OF THE PROJECT?
Quoting sources close to the Indian High Commission, Reuters reported that a framework for the terminal project will be “signed soon” and that the project would cost about $500 million.
According to Reuters, the three countries will set up a company to operate the terminal after the Sri Lankan cabinet approves the deal.
Japan will provide a 40-year soft loan with a 0.1 percent interest rate with a 10-year grace period, another source told Reuters.
“Japanese funding will be decided later once the framework is finalised,” the diplomat said.
(With inputs from NDTV and Reuters)
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