- Project to be funded by Indian grant
The proposed development of the Kankesanthurai (KKS) Port in Jaffna has reached the final stage of negotiations, with the signing of the agreement between Sri Lanka and India awaiting approval from the respective Cabinets, Minister of Ports and Civil Aviation Anura Karunathilaka told The Sunday Morning.
India’s High Commission has subsequently listed $ 65 million in grant assistance for the KKS Port’s development, with the Memorandum of Understanding (MOU) to formalise the arrangement still described as under negotiation in its bilateral relations update.
“There are no setbacks to the development of the KKS Port. It is in the final stage of the agreement; the signing is also in the final stage,” the Minister said in an interview. The high commission also said there were no impediments.
Karunathilaka further stated that the project would be financed through a full grant from India, following the conversion of the original line of credit into grant assistance.
The Minister explained that the delay was due to the need to reach an agreement between the two Governments on the terms of the MOU, following several rounds of discussions involving different Sri Lankan stakeholders.
“From the Sri Lankan side, the Defence Ministry, Foreign Ministry, Legal Draftman’s Department, and all other stakeholders were involved. There were several opinions, but somehow it is now at the final stage,” he said.
Karunathilaka said that the proposed arrangement would involve a 50-50 partnership, with the operating period currently envisaged at 25 years. However, he stressed that the terms could still change before the agreement was finalised.
“The proposal at the moment is for 25 years, but there could be some changes at the final stage,” he said.
He also confirmed that the original Indian credit line had been converted into a full grant, meaning Sri Lanka would not have to repay the funding as a loan.
Asked whether any money had already been spent under the earlier credit line arrangement, the Minister said that India had made payments towards preliminary studies and technical designs, recalling that approximately $ 2 million had been paid, although he did not give an exact figure.
The KKS Port rehabilitation project has been delayed for several years despite being initiated in 2020.
An agreement was signed between Sri Lanka and the Export-Import (Exim) Bank of India on 10 January 2018 for a $ 45.27 million credit facility to renovate the port. However, the original project could not proceed as planned, with the Government subsequently seeking Indian grant assistance to meet the revised development costs.
According to the National Audit Office’s 2024 audit report, preliminary designs, prequalification documents, and the detailed project report had been completed, while Rs. 196.3 million had been paid to consultants. The construction phase had not commenced by the end of 2024.
In February, Karunathilaka inspected the port and instructed officials of the ministry and the Sri Lanka Ports Authority (SLPA) to expedite arrangements to commence the project.
On 3 September, Sri Lankan and Indian officials held another round of discussions at the Ministry of Energy, Ports, and Civil Aviation in Colombo to resolve outstanding matters concerning the proposed MOUs. The meeting was attended by Indian Deputy High Commissioner Maitrey Kulkarni, Deputy Minister of Ports and Civil Aviation Janitha Ruwan Kodithuwakku, Ministry Secretary W.W.S. Mangala, the SLPA Chairman, and officials from the Foreign Affairs Ministry.
The two sides reached agreement on several matters, while the Indian delegation agreed to report the progress to New Delhi and seek a final decision. A joint steering committee and a technical committee were also proposed to oversee the project.