New Delhi: Originally planned to be developed jointly by Sri Lanka with India and Japan, the construction contract of the strategic Colombo Port’s East Container Terminal (ECT) was approved for a China state-owned company by the Sri Lankan cabinet on Tuesday.
China bagging the contract is indicative of its increasing footprint in the strategic island nation. Their economic bilateral ties are followed closely by a proximate military relationship, well exemplified by the recent gift of a naval frigate by China to Sri Lanka and the signing of key military pacts.
About 40 percent of transshipped India-bound container cargo passed through the Colombo Port.
Already, Chinese companies—the biggest foreign investors in Sri Lanka—hold majority stakes at the southern port of Hambantota and the Colombo’s International Container Terminal at Colombo Port.
About 70 percent of Hambantota port, about 200 km southeast of Colombo, has already been leased by the Sri Lankan government to the China Merchants Port Holdings Company for 99 years for $1.12 billion.
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China Harbour Engineering Company (CHEC)—the company that bagged the lucrative ECT contract, is a subsidiary of the China Communications Construction Company and is already working on several major infrastructure projects in the island nation.
A 2019 tripartite pact between Sri Lankan, India and Japan to develop the ECT was cancelled earlier this year on the ground that the Indian firm involved in the project refused to agree on the terms of service.
Under the tripartite agreement, investors from Japan and India would have had a 49 percent stake in ECT while the state-owned Sri Lanka Ports Authority would have retained 51 percent.
The tripartite deal was opposed by the Colombo port trade unions which alleged that it would impinge on Sri Lankan sovereignty.
About 19 petitions were filed in the Supreme Court at Colombo amid heated debates ever since the Port City Bill was tabled in the island nation’s parliament in April 2021.
However, the new deal with the CHEC provides that the strategic port terminal will be “totally operated” by the Sri Lanka Port Authority.
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