China Enters Colombo Port East Terminal Project By The Backdoor – Analysis
Earlier, India was denied the contract saying construction will be done by the Lankan Ports Authority
The construction of Colombo port’s East Container Terminal was to be given to India by an MOU signed by the Ranil Wickremesinghe government and India in 2017. This was subsequently reiterated by another bilateral agreement in 2019 entered into by the successor Gotabaya Rajapaksa government.
However, in early 2021, the Gotabaya government abrogated the 2019 agreement and declared that the work will be done by the Sri Lanka Ports Authority (SLPA). On Wednesday, there was another surprising announcement: work on the East Terminal has been given to a joint venture of the China Harbor Engineering Company (CHEC) and Access Engineering of Sri Lanka.
China had entered the East Container Terminal project by the backdoor, as it were.
India had sought to build and run the East Container Terminal in order to match China’s presence in the strategically located Colombo port. The China Merchant Port Holdings (CMPH) had built and has been running the Colombo International Container Terminal (CICT) very successfully. India’s case for having a foot in Colombo port was that 70% of the port’s business is accounted for by Indian transshipment. An additional, but unstated, reason was that India wanted to keep an eye on the activities China, its geopolitical rival.
In 2019, President Gotabaya Rajapaksa had said in his election manifesto that the East Container Terminal will be built and run by the SLPA. But on coming to power at the end of 2019, he perhaps felt the need to keep India in good humor. Therefore, government decided to give the work to India. However, the Colombo port trade unions agitated against the grant of the contract to India. Under pressure, the President withdrew the offer made to India citing his election promise. To compensate India for the loss, the government gave the contract to build and run the West Terminal to India. The Adanis would do the project for US$ 700 million.
However, constructing the East Terminal would have been cheaper for India as it was already half done. A disappointed India finally agreed to take the West Terminal offer.
On Wednesday, President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa jointly inaugurated the second phase of the Eastern Container Terminal project. The construction of the terminal will be conducted in three phases and completed in 2024. Spread over an area of 75 hectares, the terminal is 1,320 meters long. Once completed, the Sri Lanka Ports Authority (SLPA) will inherit a fully-fledged terminal equipped with 12 STC cranes that handle operations from ships to land and 40 Rail Mounted Gantry (RMG) Cranes.
“The total expenditure expected to be spent for the project is US$ 510 million and the Ports Authority will spend US$ 200 million,” a statement from the President’s Media Office said. “Access Engineering PLC and China Harbor Engineering Company Ltd. are jointly carrying out constructions,” it added.
The China Harbor Engineering Co., has been building the US$ 1.4 billion Colombo Port City, a world-class financial hub near the harbor.
