Sri Lanka awards port project to China after dropping Japan, India
Posted on November 24th, 2021

Courtesy Nikkei Asia

Beijing steps up Belt and Road spending with support of friendly president

Shipping containers at the main port of Colombo. Sri Lanka’s location in the Indian Ocean and its deep harbors have made it strategically important under China’s Belt and Road infrastructure initiative.    © ReutersRYOSUKE HANADA, Nikkei staff writerNovember 25, 2021 06:30 JST

NEW DELHI — Sri Lanka will tap a Chinese company for a port project in Colombo, its largest city, that had been awarded to Japan and India before the partnership was scrapped this year.

President Gotabaya Rajapaksa’s cabinet on Tuesday agreed to have state-run China Harbour Engineering develop the Eastern Container Terminal while stipulating that local authorities would handle all operations. It cited recommendations by a cabinet-appointed committee as the basis for the decision.

The apparent pro-China tilt of Rajapaksa’s government is seen as a factor in the change of plans. Beijing has invested heavily in projects on the strategically positioned island under its Belt and Road infrastructure initiative.

Sri Lanka had signed a memorandum of understanding with Japan and India in May 2019, under previous President Maithripala Sirisena, to jointly develop the Colombo terminal. The operating company would be 51% owned by the Sri Lankan government, with the rest held by Japan and India.

Rajapaksa, who took office in November of that year, indicated at first that the project would stay on course.

That changed this past February, when the cabinet decided that the operating company would be wholly owned by Sri Lanka, pushing Japan and India out of the project. The Japanese government called the unilateral move “regrettable.”

China has continued to provide financing for Sri Lankan infrastructure, taking control of projects such as roads and port facilities in the process. Concerns have been raised that this support is pushing the country into a debt trap.

Rajapaksa has said he wants to be “neutral” in Sri Lanka’s relations with India and China. The government recently reached an agreement with India’s Adani Group conglomerate to develop Colombo’s West Container Terminal.

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