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Seven vie to build Colombo’s East Container Terminal
View(s):Four committees to decide on tenders
By Namini Wijedasa
No fewer than four committees are evaluating Expressions of Interest (EOI) submitted by five consortia and two single bidders for a Build, Operate and Transfer (BOT) concession for the Colombo Port’s East Container Terminal. The involvement of so many players is complicating matters, a shipping industry source said. He also pointed out that it was against national procurement guidelines for anyone but a Cabinet Appointed Negotiating Committee (CANC) to make decisions regarding such tenders.
However, in addition to the CANC and a Technical Evaluation Committee (TEC), the Cabinet Committee on Economic Management (CCEM) as well as a separate ministerial committee is involved. The CCEM is headed by the Prime Minister and now habitually makes key decisions related to all major tenders in the country, Government sources said. The ministerial committee that has been set up “to advise the CANC” includes Development Strategies and International Trade Minister Malik Samarawickrama, Ports and Shipping Minister Arjuna Ranatunga and Special Assignments Minister Sarath Amunugama.
“The next step after calling for EOIs is to shortlist the bidders and float the Request for Proposals which is a detailed document,” the source said. “But we understand that the document can only be finalised when the CCEM headed by the Prime Minister finalises what the shareholding of the Sri Lanka Ports Authority (SLPA) should be in the management agreement.” “A CANC is appointed by the Cabinet of Ministers, which is the highest decision-making body,” he pointed out. “While that is going on, they have to keep referring back to the CCEM. On top of that, there is another ministerial committee. It goes against the fundamentals of procurement. You must handle the process through the CANC.”
SLPA invited EOIs in June 2016 for the East Container Terminal. The Sunday Times learns that five consortia have applied. The first is Aitken Spence PLC with Port of Singapore Authority (PSA) and Shapoori Pallonji, which is an Indian business conglomerate. The second is China Merchant Holdings International (CMHI) with Evergreen, CMA CGM (shipping company) and Summit Shipping from Bangladesh.
The third is John Keells with APM Terminals, Maersk Lines and Container Corporation of India Ltd. The fourth is Terminal Link (of which 49 percent is owned by CMHI) with CMA CGM. The fifth is Hayleys with Westport Shipping Services LLC (of which 25 percent is owned by Hutchison Ports), Mitsui and Co, Mitsubishi and Co and NYK. Two others–Transnet (South Africa) and MST Terminals–have put in single bids and may not qualify as they do not own shipping lines.
The Government has enlisted the Asian Development Bank (ADB) as consultant. The parties have been asked for clarifications on their bids by November 18, 2016. Another month is likely to elapse before a shortlist is decided upon. Industry sources welcomed the proposal to go for a BOT. “The East Container Terminal has been in existence for around two years,” said one private sector shipping expert. “The SLPA spent over US$ 100 million on civil work. The whole idea had been to buy cranes and start working to prevent the erosion of SLPA volumes to the competition.”
SLPA has lost its market share from 60 to 40 percent. The main competitor is the Chinese-run Colombo International Container Terminals Ltd (CICT). However, the crane procurement was cancelled and EOIs advertised for a BOT.