New Delhi: Sri Lanka on Tuesday said it will develop the West Container Terminal (WCT) at the Colombo Port along with India and Japan, almost a month after it said that the two partner countries could not develop the similar East Container Terminal due to opposition from port workers’ unions to “foreign involvement” in building the terminal.

The Sri Lankan cabinet on Monday gave the green signal to the WCT being developed by “parties nominated” by the two countries. India’s Adani Ports had been one of the partners to develop the East Container Terminal (ECT) previously.

The three governments have now concluded a pact on the WCT development.

A statement from the Sri Lankan government said the WCT would be developed as a “public-private limited company in collaboration with the Sri Lanka Ports Authority.” The Sri Lankan government has also decided to appoint a “Cabinet Appointed Negotiation Committee and a Project Committee to evaluate the proposals in this regard. Accordingly the Build, Operate Transfer plan approved by the Negotiation Committee has been forwarded to the High Commission of India and the Embassy of Japan requesting them to nominate investors,” the statement said. “The proposal presented by Adani Ports and Special Economic Zone Limited (APSEZ Consortium) has been approved by the Indian High Commission.”

There was no immediate comment from New Delhi. An Indian high commission official told reporters in Colombo that the high commission was “surprised” by the statement given that any investment in Sri Lanka had to be approved by the Colombo government and not by the Indian High Commission.

People familiar with the matter in India had however expressed reservations about the Sri Lankan government offering the WCT for development after cancelling the contract related to the ECT on 1 February. The reservations were due to the fact that the three countries – Sri Lanka, India and Japan — had signed an agreement in 2019 for the development of the ECT situated at one of the two edges of the Colombo International Container Terminal at the port, operated jointly by the Sri Lanka Ports Authority as well as the Beijing owned China Merchants Port Holdings Company Ltd. In recent years, China has expanded its presence in the island nation, seen as lying within India’s sphere of influence in South Asia. In the past, relations between New Delhi and Colombo had been strained given the perceived tilt of the Rajapaksa brothers towards Beijing.

The fact that Sri Lanka had cancelled an international pact on the ECT was one of the things worrying New Delhi besides the fact that there were no guarantees that the WCT development would not be hit by protests of port workers’ unions. The protests against “outsiders” developing the port had been cited the key reason for the cancellation of the ECT development. Almost 60%-70% of the transshipment cargo handled by the Colombo port is destined for India given that Asia’s third largest economy does not have deep water ports to handle large container cargo ships.

“The Sri Lankans dishonoring an agreement with two sovereign countries in a sensitive situation does not help to create trust in relations,” said former foreign secretary Kanwal Sibal.

“Nevertheless it was important for India to secure a foothold in what was totally a Chinese project and get the Sri Lankan government to convey to China that it could not have exclusive presence in the port. So from defeat, it has become half a victory,” Sibal said.

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