India’s security halts bidding for Colombo port terminal

March 2nd, 2008 - 12:32 pm ICT by admin  

By P.K. Balachandran
Colombo, March 2 (IANS) India’s security has become an issue in the controversial bidding for the new container terminal in Colombo port. One of the parties has been carrying on a thinly veiled campaign in the Sri Lankan media saying that India’s security will be threatened if the contract is awarded to Hutchison Port Holdings (HPH), a Hong Kong-based company. The campaign has been successful to the extent that the Sri Lankan government has now cancelled the earlier bids and called for fresh bids “in the national interest”.

Observers say that “national interest” may have two aspects, one is the need to give the project to a Sri Lankan company (Aitken Spence) and the other is to be mindful about the security needs of India, Sri Lanka’s only neighbour and regional power, which is in competition with China.

When the bids for the project to build a three-berth terminal to handle 2.4 million Twenty-foot Equivalent Units (TEU) containers per annum closed in June 2007, the principal bidders were Aitken Spence Shipping Ltd. (in partnership with Singapore’s PSA International); Hong Kong’s Hutchison Port Holdings (HPH); and Hayleys (in partnership with the French company CMA-CGM).

Airtken Spence quoted $195.6 million, HPH $173.5 million and Hayleys $99 million. The Cabinet Appointed Negotiating Committee (CANC) and the Technical Evaluation Committee (TEC) recommended the award of the contract to Aitken Spence-PSA combine, having given 78 marks to Aitken Spence, 69 to HPH, and 60 to Hayleys.

“However, due to reasons best known to the Sri Lanka Ports Authority (SLPA), it was hell bent on awarding the project to HPH,” pointed out Sharmini Serasinghe, who writes on shipping in the Sri Lankan media.

HPH would have made it, but for a relentless campaign against it in the media.

The campaign kept driving the point that the Sri Lankan government should take into account India’s security concerns.

It was pointed out that 70 percent of Colombo port’s business was handling transhipment containers, and of the containers, 80 percent were in and out of India. India’s position in Colombo port was clearly pre-eminent. Therefore, Sri Lanka would do well to be aware of the impact of developments in the port here on India’s security.

India would not like Colombo port to be in the hands of a company with dubious ties with Beijing, Serasinghe told IANS. HPH’s owner, the Hong Kong-based Li Ka-shing, had strong ties with the Chinese government, she said.

“Hutchison was barred by India in 2006 from participating in a project to build a container port in Mumbai, citing security concerns,” she said.

“India has long been wary of allowing China to invest in sensitive sectors like ports and telecommunications because of security concerns. In fact, when China offered to provide Sri Lanka a JY 11 3D radar, India bluntly vetoed it, obviously because the system could over-arch into air space as we (Sri Lanka) are geographically close to India,” she said.

“Investments by Li Ka-shing have generated security concerns in the US also, partly because of his connections to China. Reportedly, members of the US Congress have warned against allowing HPH to expand its interests in Panama, accusing it of being an agent for China and posing a long term strategic risk to American interests in the Panama Canal,” Serasinghe pointed out.

China, say many security experts, has been encircling India by penetrating its neighbourhood. It has established strategic links not only in Pakistan but also in Nepal, Bangladesh and Myanmar.

In Sri Lanka, it is building a port in Humbantota. In Pakistan, the port it is building at Gwadar could spy on US and Indian naval activity in the Arabian Sea, the Persian Gulf and the Indian Ocean, says Zia Haider of the Washington-based think tank, Stimson Center.

“China’s foothold in the Arabian Sea (at Colombo port) will certainly not be welcomed with open arms by India,” Serasinghe asserted.

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