India still to play role in Lanka's port

India continues to remain in fray to play a role in the strategically located Colombo Port in the Indian Ocean Region, notwithstanding the Sri Lanka’s decision to drop plans to privatise the port’s East Container Terminal (ECT).

In a statement last week, Sri Lankan minister for ports and shipping Mahinda Samarasinghe said the construction of the terminal was being expedited by the Sri Lanka Ports Authority (SLPA), a state-run agency in the island nation. The ECT will be operated by the SLPA "to ensure best services for all mega container vessels calling at the Port of Colombo in near future”, the minister said.

 President Maithripala Sirisena’s government seems to have come under pressure to scrap the plan due to fear that the port’s privatisation could cost a large number of jobs. SLPA was also against privatisation citing this reason, people familiar with the matter told ET.

An India-led consortium, was front-runner for the ECT project, was earlier intimated of the domestic sensitivities arising out of the decision to privatise the project.

 But the Indian consortium would still likely play some role in the project but the details of that have not yet been decided, a person familiar with the matter said.

SLPA claimed that it had resources to handle the ECT expansion project, since China Merchants Port Holding has now taken over running of the lossmaking Hambantota Port. The ECT project involves running of an existing 400-metre deep-water berth, as well its expansion to 1,200 metres, including design, finance, construction, operation and maintenance.

 Colombo wanted a foreign country to partner with SLPA to invest and take over the ECT, and India showed interest in the project.

As much as 75% of trans-shipment from the Colombo port goes to India and Delhi is looking at getting a stake there in the heart of the Indian Ocean Region. Besides Colombo, in eastern part of Sri Lanka, India and Japan would jointly develop the Trincomalee port.

State-run Container Corporation of India formed a consortium with APM Terminals BV, John Keells Holdings and Maersk Line to bid for the Colombo port’s ECT. The total project value was expected to be $550-600 million. The south terminal of the port is already owned and operated by China Merchants Port. Colombo Port is the busiest in Sri Lanka and ranks among the top 35 in the world.

Meanwhile, Indian think tank Gateway House in a report on Beijing’s footprint in South Asia said China had invested or committed to invest more than $150 billion in the economies of Bangladesh, the Maldives, Myanmar, Pakistan, Nepal and Sri Lanka. China is now the largest overseas investor in the Maldives, Myanmar, Pakistan and Sri Lanka, it said.

Chinese penetration is the highest in Myanmar and Pakistan, where Chinese money is bolstering governments that face international isolation due to human rights violations and terrorism, respectively, the report said. But Bangladesh, the most vibrant economy in India’s neighbourhood, is least dependent on China.

“China’s playbook is clear: It first enters as a military supplier, then cultivates and partners with local elites, provides modern infrastructure with deferred payments, and entrenches itself,” the recently published report said. “Beyond hard infrastructure, China is thinking geo-economics. It is investing in the financial systems of these countries. Beijing has taken stakes in the Dhaka and Karachi stock exchanges and cultivated a yuan trade between China and Pakistan. It is establishing China-based courts for arbitration of BRI disputes. Clearly, Beijing seeks to create new rules, governing business and financial systems in the region — changes that could cement its dominance in India’s neighbourhood,” it said.