THE Port of Colombo with its 7.2 million TEU
annual capacity on the main Asia-Europe trade lane has become a bone of
contention between China and India, reports the Ceylon Daily
News.
China says it has every right to run the Colombo
International Container Terminal (CICT) and the Hambantota Port besides,
and wants no interloper from India and Japan, who seek a stake in the planned Eastern
Container Terminal (ECT).
India's stated case is that 60 to 70 per cent
of the Colombo Port's business is accounted for by Indian transshipment and
therefore, India should have a stake in the running of the port, said the
report.
But the unstated but equally important case is that India
needs to stem China's intrusions into Sri Lanka's economy and that a presence
in the Colombo's ECT will enable it to watch the Chinese ensconced in the CICT
next door.
Since China considers the CICT and the
Hambantota Port as being part of Xi Jinping's flagship project, the Belt and
Road Initiative, India is aiming at getting Sri Lanka to be part of the
US-India-Japan-Australia "Quad".
For the "Quad" to be meaningful, India or Japan
will have to have a place in the Colombo Port. India has already made Sri Lanka
host a Secretariat to coordinate the activities of the Indian Ocean trilateral
maritime defence system involving Sri Lanka, the Maldives and India.
But Sri Lanka has become wary about handing
over national assets like ports to foreign entities after the controversial
leasing out of the Hambantota Port in 2017 to Chinese state-owned, but Hong
Kong-based China Merchants Ports on a 99-year lease for US$1.2 billion.
The incumbent Sri Lankan regime headed by the Rajapaksa
family is highly nationalistic and suspicious about foreign involvement in
projects with national security implications.
During presidential and parliamentary elections in 2019 and
August 2020, the Sri Lanka Podujana Peramuna (SLPP) headed by the Rajapaksas,
had pledged to develop and run the ECT without foreign control.
But strapped for cash, the government also faces congestion
in the Colombo Port which must be relieved by urgent port expansion, a
situation made worse by a 30 per cent fall in the workforce due to the Covid
crisis, said the report.
There has also been a backlog of 50,000 TEU with 23 ships
waiting to enter the harbour on an average, said Rohan Masakorala, CEO of
Shippers' Academy Colombo. "Vessels were also bypassing the port
and shippers had begun to feel the absence of the ECT.
"If we had operationalised the ECT, the current
congestion and crisis would have been minimised or averted. The transshipment
volumes would have not dropped by five per cent to six per cent. Instead, with
trade recovery, we could have grown four per cent. The opportunity cost has
been over 10 per cent," Mr Masakorala said.
The ECT was conceived seven years ago but the first move to
set it up with foreign collaboration was made in 2015. The then pro-western and
pro-Indian Sri Lankan Prime Minister Ranil Wickremesinghe decided to give its
development to the Sri Lanka Ports Authority (SLPA) and an Indian company.
It was rightly felt that involvement of a foreign shipping
company or ports operator was necessary to get business for the Colombo Port.
However, all bidders were disqualified by a cabinet committee under pressure
from nationalist President Maithripala Sirisena.
Concerned that the pro-China Rajapaksa regime would come
under China's control, India increased pressure. But an SLPP-inspired dockers'
union struck. Eventually, Prime Minister Mahinda Rajapaksa secured labour peace
on assurances that national sovereignty would not suffer.
When the coronavirus epidemic crippled work in all the
terminals of the Colombo Port, the Government came under increased pressure
from shippers and traders to implement the May 2019 MOU on the ECT urgently.
On December 22, SLPA chairman Daya Ratnayake
denied that the government has approved a proposal to allow an Indian company,
the Adanis, to develop the ECT. He said that the Cabinet has
appointed two committees to evaluate all the proposals made in regard to the
ECT.
Keeping the door open to India, Ratnayake pointed out that
61 per cent of the total 82 per cent transshipment business was generated from
India and said: "If an Indian company gets involved, we can retain and
expand our current businesses by attracting large shipping lines and volumes
from India. We should remember that there are a lot of ports in our region and
there is severe competition."
Source : HKSG / Photo : THe Maritime Executive.
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