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Port Terminal deal ends intense diplomacy

Ports Minister Sagala Ratnayake, Japanese Ambassado Akira Sugiyama and Indian High Commissioner Taranjit Sindh Sidhu after the signing/SLPA handout

Sri Lanka, India and Japan signed up yesterday to co-operate to develop a container terminal in the Colombo Port, ending months of intense diplomatic activity over the concession.

Colombo has been keen to get India and Japan on board the venture to balance off China which operates one terminal in the port while John Keels Holdings operates another.

Transshipment cargo from India makes up nearly 70 percent of the Colombo Port’s business, making out giant neighbor ports industry. It also makes Colombo the leading port in the region.

India has been lobbying hard for a stake in the Colombo Port. The Indian Federal government in New Delhi has been under pressure from regional governments in Kerala and Tamilnadu for ports to be upgraded there.

Development of Kochin in Kerala, for instance, would have dealt a blow to Colombo’s volumes and the government has been naturally keen to appease India.

Under yesterday’s agreement companies from the three countries are expected to set up a terminal operating company to run the so-called 1,200 meter East Container Terminal.

About a third of the terminal has already been built by the Ports Authority but the project needs cash to develop it to be a fully operational facility.

Most importantly money is required to buy cranes, and Japan is expected to provide a concessionary loan for that.

The Ports Authority said the three governments will work out details of the operating arrangements at joint working group meetings.

Economynext reports that the government “abandoned a plan to get a private company with Indian participation through an orthodox concession agreement without explanation after getting bids from top shipping and container firms in the world.”