Sri Lanka halts port deal with India and Japan amid protests by trade unions

The Government of Sri Lanka on February 2 scrapped a deal to develop a major port terminal with India and Japan amid weeks-long protests by trade unions and opposition parties.

Indian government has asked Sri Lanka to abide by its commitment to allow India and Japan to develop the east container terminal (ECT) of Colombo port.

Sri Lanka had previously agreed to develop the strategic East Container Terminal at the Colombo port with India and Japan. Under the deal, India and Japan were to own 49 percent of the terminal’s shares while Sri Lanka’s Ports Authority would retain the majority stake.

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

The Indian embassy in Colombo said India expects the timely implementation of the agreement the three countries signed in 2019. 

The Colombo port trade unions had opposed the proposal of investors from India and Japan buying 49 per cent stake in the ETC. They had demanded the ECT to remain 100 per cent owned by the SLPA as opposed to the 51 per cent.

Some 23 trade unions had joined hands to oppose the port deal.

India, Japan and Sri Lanka had signed the Memorandum of Intent for a trilateral arrangement for the project under the former Maithripala Sirisena-Ranil Wickremesinghe govt. 

Under the arrangement, a Sri Lankan govt PSU - Sri Lankan Port Authority will hold majority share with the remaining share being held between Japanese and Indian entities.

The Indian reaction comes even as Sri Lankan Prime Minister Mahinda Rajapaksa assured the local worker's trade union that the terminal will not be sold or leased to any foreign entity. 

In a tweet, he said that the Lankan Ports Authority will maintain control of the ECT and the Sri Lankan govt "adheres strictly to its policy of retaining assets belonging to the govt". In fact, Sri Lanka cabinet three months ago took the decision to implement the project with foreign investors.

(With inputs from agencies)