Sri Lanka approves new port deal with India and Japan

Sri Lanka's government said Tuesday it will allow India and Japan to develop a new container terminal at the country's main port, several weeks after scrapping a deal with the two countries to develop one of the key terminals at the same port. Government spokesman Keheliya Rambukwella said the Cabinet approved the project, to be run as a public-private company with the Ports Authority and companies selected by the governments of India and Japan. Rambukwella said the government was offering foreign participation in the West terminal because it requires a large investment to be developed, while the East terminal is completed and requires little additional money.

 Sri Lanka halted the 2019 agreement for India and Japan to develop and operate the crucial East Container Terminal at Colombo Port after weeks of protests by trade unions and opposition parties. It said the terminal will be fully owned and developed instead by the state-run Ports Authority. Japan said it regretted the Sri Lankan decision, while India urged that the 2019 agreement be implemented. India has selected Adani ports, which was earlier chosen to invest in the East Container Terminal. Japan has not yet named its investor in the project, which will be operated on a build, operate and transfer basis for 35 years. India was particularly interested in the East terminal because it contributes about 66% of the re-exports from that terminal. China already operates the Colombo International Container Terminal as a joint venture with the Ports Authority.