- Former PM compelled to cancel deal after pressure from port trade unions
- ECT’s location in Colombo port has raised geopolitical concerns
- Sri Lanka has already given WCT to India to be developed as a JV with John Keells
ECONOMYNEXT – Revenue in Sri Lanka Colombo Port’s East Container Terminal (ECT) operation rose to a record high last year as President Ranil Wickremesinghe’s administration is awaiting for a response from Japan after offering the ECT.
The island nation’s decision to offer it to Tokyo comes almost a year after the government unilaterally cancelled a tripartite deal with Japan and India.
The state-run Sri Lanka Ports Authority (SLPA) has already developed 575 meters of the quay wall, adjacent yard area and connected facilities at ECT, whose total development cost is estimated at $550 million.
The record revenue, though a paltry, is earned while the terminal is under a 36-month construction of civil work.
In the 11 months of the last year, the ECT earned 1.1 billion rupees, higher than the record annual revenue of 1 billion rupees achieved in 2018, official data by the government showed.
It earned only 678.6 million rupees in 2021 when the trade was slumped due to Covid-19 lockdown.
The tripartite agreement was signed with Japan and India in May 2019, but former Prime Minister Mahinda Rajapaksa in February 2022 unilaterally cancelled it after trade unions in Colombo Port opposed foreign nations coming into potentially the country’s one of the highly profitable terminals.
President Wickremesinghe, however, last month said the ECT had been offered to Japan after Colombo Port’s West Container Terminal was given to India’s Adani group to develop as a joint venture with Sri Lanka’s conglomerate John Keells Holdings.
Government officials have said the Japanese government has yet to respond firmly on the offer as Sri Lanka is reeling with an unprecedented economic crisis.
The terminal is located next to a $500 million Chinese-run container terminal and a Chinese-owned reclaimed Port City. The government approval to India and China came after reviewing regional geopolitical concerns – India’s suspicion of China’s role at the same port. The port’s major business in transshipment and India accounts for 70 percent of Colombo port’s transshipment.
The finalisation of construction work had been delayed amid the last government’s push to give the construction work to foreigners. According to Finance Ministry officials, the delay has caused a revenue loss of more 250 billion rupees to the state since 2015. (Colombo/Jan02/2023)