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ECT crisis: Port unions present their own management proposals
View(s):Port unions campaigning against plans to hand over ColomboPort’s East Container Terminal (ECT) to an Indian-led joint venture presented their own management proposals to the Sri Lanka Ports Authority on Friday.
These will be among the suggestions to be considered by the Cabinet Appointed Negotiating Committee (CANC) which has also received a draft concession agreement and project proposal by a separate Project Committee (PC). A concession agreement is a contract that gives a company the right to operate a specific business within a Government’s jurisdiction or on another firm’s property, subject to particular terms.
There have been two committees–the PC and CANC–examining the various proposals. The CANC will now start discussions with relevant parties, including the aspiring investors. The first of such meetings will be on Wednesday with India’s Adani Group, Sri Lanka’s John Keels Holdings and the Japanese investor.
The Government’s decision will be based on the CANC report, said SLPA Chairman Daya Ratnayake.
Meanwhile, the United National Party (UNP) said yesterday that it’s not in favour of India’s Adani Group being involved in ECT development.
“The Memorandum of Corporation (MoC) was signed between the Sri Lankan, Indian and Japanese Governments to lease out the terminal to a Terminal Operating Company,” a statement said. “Accordingly, a Terminal Operations Company was to be established with Sri Lanka retaining a 51% stake, while the remaining 49% stake would be distributed between a nominee company of India and a nominee company of Japan.”
“On the 10th of September 2019, Cabinet approval was provided to proceed with the signing of the cooperation agreement between the three countries,” it said. The Terminal Operations Company (TOC) was set up with the “exclusive and explicit purpose of providing the equipment and systems necessary for the development of the ECT and managing the ECT”.
The TOC was to be provided with a set period of time to operate the ECT, thereafter the manner of operations of the ECT was a decision of the Government of Sri Lanka.
“There is no mention of a sale of the ECT,” the UNP statement held. “The development and operations of the ECT was to be carried out over two phases. Phase ‘A’ was to consist of the operation of the existing 600-meter quay length with the necessary terminal handling equipment.
“Funding for this phase was to be provided via a US $190m loan from JICA,” it continued. “Phase ‘B’ would require further funding of US $500m and would result in the extension of the quay from 600 meters to 1,350 meters as well as creating new yard space.
“That is an additional 750 meters,” the statement pointed out. “Furthermore, the Governments of Sri Lanka and Japan were undergoing negotiations to sign the Exchange of Notes under highly concessionary conditions.”
Accordingly, the loan provided by JICA would be done so at an interest rate of 0.1% for a period of 40 years, with a grace period of 12 years. Japan has continually funded the development of the Colombo Port since 1977.
The construction of phase “B” with a loan obtained by the Sri Lankan Government would ensure that ownership of the East Container Terminal would be retained.
In the case of an investment in the terminal by other parties, the Government would not have exclusive ownership. Other details were to be negotiated in accordance with clause 3 & 5 as stipulated in Memorandum of Corporation, by a Joint Working Group comprising of representatives of the three Governments.
“None of these matters had been finalized,” the UNP points out. “The decision of the management of the TOC had to be taken jointly by the three Governments. At the time of President Gotabaya Rajapaksa assuming office, India had not formally informed us of the company which they would nominated.”
“It was indicated that it would be the Adani Group,” it said. “The Sri Lankan Government had the condition that the Indian partner should not operate any other port in India to the disadvantage of the Colombo Port. This was to ensure that the Colombo Port would retain its status as the main container port for South Asia.”