The Government yesterday defended its decision to approve Adani Group to develop the West Container Terminal (WCT) conceding that the Indian Government did not specifically nominate the company, but that the selection was based on an “assumption” as the second terminal project was deemed less strategic.
Cabinet Co-spokesman and Energy Minister Udaya Gammanpila, responding to questions at the weekly Cabinet briefing, took pains to explain Government thinking behind the decision after Indian authorities denied they had backed Adani Group to front the WCT Joint Venture with local conglomerate John Keells Holdings and Japan.
The Indian Government had previously nominated Adani Group for the East Container Terminal (ECT), which was given to the Sri Lanka Ports Authority (SLPA) for development following prolonged protests from trade unions and pro-Government nationalist forces.
When questioned about why Adani Group was selected for the WCT project despite no specific request from the Indian Government, Gammanpila said the Sri Lankan Government continued under the “assumption” it would remain as the nominee for the WCT as well.
“By the time the Government had made the decision to give the ECT to the SLPA the Indian Government had already nominated the Adani Group or the ECT development. Because this is the same investment and only the location changed, the Sri Lankan Government assumed that this (Adani) would continue as the nominee of the Indian Government. The Indian Government has expressed they will not officially involve themselves in joint venture discussions, so Sri Lanka will continue its dialog with the Adani Group with regard to WCT,” Gammanpila told reporters.
Minister Gammanpila backed the statements made by his colleague, Cabinet spokesman Keheliya Rambukwella last week, as Adani being an Indian Government nominee but conceded that the Indian Government contention that it had not been for WCT was also true.
“In a way both statements are correct because the Indian Government did not make a nominee for WCT. To that extent the Indian Government stance is correct. Secondly, the Sri Lanka Cabinet spokesman said the Government is working with the nominee of the Indian Government, which is also correct. The Sri Lankan Government only decided to change the location of the investment and keep the investor already nominated by the Government of India.”
The Cabinet co-spokesman reiterated that the SLPA had requested the Japanese embassy to nominate an investor for WCT but said he did not have any updated information on the matter.
When asked to respond to reports of trade unions being unhappy about the Sri Lankan Government dealing directly with Adani sans Indian Government oversight, Gammanpila insisted it was the unions themselves who had proposed giving the WCT to India and Japan. “The majority of trade unions are supportive of this decision,” he claimed.
In the former Memorandum of Understanding (MoU) signed in 2019, the SLPA was to hold a 51% stake of the ECT. However, under the new project Adani and Japan could hold as much as 85% of the JV.
Gammanpila also argued that the WCT was a less strategic project than the ECT, even though it will be part of the Colombo Port. Gammanpila contended that the ECT, being located next to the JKH-run South Asia Gateway Terminal (SAGT), would support back-to-back operations and have the capacity to boost operations within the Colombo Port but that the WCT would have less critical impact.
The Minister also dismissed earlier concerns that Adani Group’s selection would be a conflict of interest because it operates 12 ports along India’s west and east coasts, representing 24% of that country’s port capacity.
“Sri Lankan nationalist forces as well as trade unions of the SLPA were strongly of the view that ECT is a strategically important terminal and should not be developed with any company with a conflict of interest. But here the WCT is not considered as important as the ECT and their experience in the port sector would be considered as a positive and not negative factor,” he maintained. The Minister also said tendering the WCT to attract fresh investors was not possible due to the existence of the 2019 MoU signed for the ECT.
On 1 March, Cabinet approved the proposal presented by Ports and Shipping Minister Johnston Fernando to develop the WCT on a Build Own Transfer (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.
(FT)