Cabinet has cleared the West Container Terminal (WCT) of the Colombo Port to be developed as a 35-year joint venture with India’s Adani Group and its local partner John Keells Holdings PLC as well as with investment from Japan, a top official said yesterday.
Cabinet Spokesman and Media Minister Keheliya Rambukwella told reporters at the weekly Cabinet briefing that the decision was taken in accordance with policies outlined in the President’s manifesto ‘Vistas of Prosperity and Splendour’.
He acknowledged that the Government had also taken into consideration the Memorandum of Understanding (MoU) that was signed by the former administration with India and Japan for the East Container Terminal (ECT). The new venture will also include a stake for the Sri Lanka Ports Authority (SLPA).
Rambukwella responding to questions denied that agreeing to foreign investment for the WCT was a deviation from the Government’s policy of not giving strategic assets to other countries and insisted that this venture would be beneficial to Sri Lanka.
“When we were having discussions with trade unions and other stakeholders over the ECT we made it very clear that the WCT would be done with foreign investment. Since Sri Lanka was already bound to the pre-existing MoU signed in 2019 it was decided to get India and Japan’s involvement. We want to make it very clear that this is not a decision that is detrimental to Sri Lanka, like the handover of the Hambantota Port for 99 years,” Rambukwella said.
He argued that ECT development required less funds, which could be supplied by the Sri Lankan Government but the WCT, being an entirely new project, required foreign funds for completion.
The Cabinet Spokesman emphasised that the development would have oversight by a Cabinet Appointed Negotiating Committee and a Project Committee. The latter has already approved the BOT plan and forwarded the same to the Indian High Commission and Japanese Embassy requesting them to nominate investors.
Rambukwella noted that the Indian High Commission had already responded while they were awaiting Japan’s reply. Both the Project Committee and the Cabinet Appointed Negotiating Committee will evaluate the investor proposals sent by the diplomatic missions.
“The proposal presented by Adani Ports and Special Economic Zone Ltd. (APSEZ Consortium) has been approved by the Indian High Commission. No Investor has been named by the Japanese Government yet,” Rambukwella added.
The Cabinet Appointed Negotiating Committee has presented its recommendation based on the discussions held between the two parties and accordingly the Cabinet approved the proposal presented by Ports and Shipping Minister Johnston Fernando to develop the WCT on a BOT basis for a period of 35 years as a Public-Private Partnership with Adani Ports and Special Economic Zone Limited and its local representative John Keells Holdings PLC and the SLPA.
Under 2019 MoU SLPA was to have a 51% stake of the ECT with Japan providing about $ 500 million to develop the terminal. The Indian Government had earmarked Adani to carry out the construction and operations on a Build, Operate and Transfer (BOT) basis. The selection of Adani ran into controversy in Sri Lanka partly because it operates 12 ports along India’s west and east coasts, representing 24% of that country’s port capacity.
The decision on WCT comes just a month after Cabinet controversially decided to hand over development of the East Container Terminal (ECT) to the Sri Lanka Ports Authority (SLPA) despite protests from India.
However, under the new deal India and Japan will have an 85% stake in the WCT, like the Colombo International Container Terminal, where China Merchants Port Holdings Company holds a similar stake. This is significantly higher than the 49% stake outlined in the MoU signed under the previous Government.
(FT)