COLOMBO: Sri Lanka has scrapped a deal to develop a major port terminal with India and Japan amid weeks-long protests by trade unions and opposition parties while New Delhi called on its neighbour to honour the agreement.

Sri Lanka had previously agreed to develop a strategic container terminal at the Colombo port with India and Japan. Under the deal, 49 percent of the terminal’s shares were to be owned by India and Japan while Sri Lanka’s Ports Authority would retain the majority stake.

But on Tuesday, Sri Lanka’s government declared the East Container Terminal a wholly owned container terminal of the Ports Authority.

The government said it would instead develop the port’s West Container terminal with investment from India and Japan.

The Indian embassy in Colombo said Delhi expects the timely implementation of the agreement the three countries signed in 2019.

The commitment of Sri Lanka in this regard has been conveyed several times in the recent past, including at the leadership level. The Sri Lankan cabinet also took a decision three months ago to implement the project with foreign investors, the embassy said in a response sent via WhatsApp.

“All sides should continue to abide by the existing understandings and commitment,” the embassy added.

There was no immediate comment from Japan.

Tension has been growing in Sri Lanka in recent weeks over the port deal among trade unions and opposition political parties who have demanded the government halt the plan to develop the terminal with India and Japan’s assistance.

But India has remained steadfast about the project during high-level discussions, including during a visit last month from External Affairs Minister Subrahmanyam Jaishankar.

A week after his visit, Sri Lankan President Gotabaya Rajapaksa said the east terminal would be developed as an investment project of which Sri Lanka owned 51 percent. The remaining 49 percent would go to India’s Adani Group and other stakeholders, he said.

New Delhi, which considers the Indian Ocean region to be its strategic backyard, has for years been worried by Beijing’s economic and political influence over Colombo.

China considers Sri Lanka to be a critical link in its massive Belt and Road global infrastructure building initiative and has provided billions of dollars in loans for its projects over the past decade. The projects include a seaport, airport, port-city, highways and power stations.

Published in Dawn, February 3rd, 2021