The proposal made by Ports and Shipping Minister Rohitha Abeygunawardena to hand over the Colombo Port Western Container Terminal (WCT) to Adani Company of India was approved by the Cabinet yesterday (01).
In the discussions at the Cabinet meeting held on 01st February 2021, it was approved to develop the WCT as a Public-Private Enterprise in collaboration with the parties nominated by Indian Government and the Government of Japan and the Ports Authority of Sri Lanka and a Project Committee and a Committee of Negotiation to evaluate proposals in this regard.
Japan maintains silence
On the proposals made by the committee, the Indian High Commission and the Japanese Embassy were instructed to nominate investors for the development project , but only the Indian High Commission has nominated an investor so far, the Department of Government Information states.
The Indian High Commission has agreed to the proposal made by Adani Ports and Special Economic Zone Limited, and this decision has been taken on the recommendation of the Negotiation Committee appointed by the Cabinet of Ministers, based on the discussions held between the two parties.
When inquired about this, an official of the Japanese Embassy in Sri Lanka said that she could not make any statement on the matter at this time.
John Keells as the Local Agent!
Accordingly, the proposal made by the Minister of Ports and Shipping as to the Adani Company and its local agent John Keells Holdings PLC and the Sri Lanka Ports Authority jointly are to develop the Western Terminal, on as basis of returning the WCT back to the Sri Lanka Ports Authority after a period of 35 years.
The Minister of Ports and Shipping Rohitha Abeygunawardena has proposed to hand over the Western Terminal of the Colombo Port to this party for a period of 35 years, as per the Cabinet Memorandum submitted to the Cabinet earlier in this regard. ‘The other party’ described in the paper was clarified as a private party named by the Government of India and the Government of Japan.
The memorandum further stated that the Ports Authority should also be involved in this and that it should be run as a public-private partnership, citing Sri Lanka’s signing of an agreement with India and Japan on the Eastern Terminal as reasons.
John Keells and Cabraal
According to the company’s website, Krishan Balendra is the chairman of John Keells. Gihan Cooray is the Deputy Chairman and the Board of Directors also has five non-executive directors. Ashraff Omar, Primila Perera, Amal Cabraal, Nihal Fonseka and Hans Wijesuriya are the non-executive directors.
Among them are Amal Cabraal and Nihal Fonseka, cousins of current Minister of State Ajith Nivard Cabraal.
Nihal Fonseka’s sister, the former CEO of DFCC Bank, was on the board of directors of Perpetual Treasuries, which was involved in the controversial bond deal and the media had reported that Nihal Fonseka was also a director of the Aquity Group, a primary customer involved in the bond issue, at the time of the deal.
Amal Cabraal was also a member of the Board of Directors of Hatton National Bank, another primary customer of the Central Bank at the time of the controversial deal. Minister of State for Finance and Capital Trade Ajith Nivard Cabraal told the Daily Island on 28th January that the development of the Colombo Port Terminal in collaboration with India is a must. He also said that it could not be done without India.
Beneficial to the WTC
However, Rohan Masakorala, CEO of the Colombo Shipping Academy, said that the Western Terminal would benefit the most from the simultaneous development of the Eastern Terminal and the Western Terminal. He added that the reason was that the company developing the Western Terminal has more international connections, thus the opportunity to carry out more operations.
Indian company, the Adani Group is already conducting joint ventures with MSC, one of the world’s leading shipping companies, he emphasized. Adani Group has been conducting container operations at the Mundra Port in India, jointly with MSC since 2013. After the two companies started working together, Adani Group Chairman Gautam Adani told the media that he had taken over all operations in the region.
After the ECT,
Earlier, the Eastern Container Terminal of the Colombo Port was to supposed to hand over to the Adani Company of India. It was strongly opposed by civil society organizations, including 23 trade unions. Although President Gotabhaya Rajapaksa and Ports Authority Chairman Daya Ratnayake initially said that the terminal would be opened for Adani’s investment, the decision was later altered.
Accordingly, the Cabinet decided on 1st of February to keep the ECT of the Colombo Port 100% under the control of the Sri Lanka Ports Authority and to call for investments in the development of its Western Container Terminal.
Do not give the Western Terminal to foreign companies – A letter to the President
Meanwhile, General Employees Union of the ports had recently sent a letter to President Gotabhaya Rajapaksa, requesting him to immediately change the decision to hand over the Colombo Port Western Container Terminal to foreign companies.
The letter, signed by the convener of the union, Niroshan Gorakanage, emphasized the importance of keeping the terminal in the possession of the Ports Authority to the President. It further requested the President to take immediate action to resolve the issue.
Not our way
When inquired to whether the Ports Branch of the Commercial, Industrial and Service Progressive Employees’ Union affiliated to the Sri Lanka People’s Front agrees with this letter by Ports General Employees’ Union, the General Secretary of the Commercial, Industrial and Service Progressive Employees’ Union, Shyamal Sumanaratne as stated that it is not their Union’s way to oppose everything.
He said that a promise has been made in this regard when obtaining a loan of US $ 300 million from the Asian Development Bank for the breakwater development of the Colombo Port and that the Western Terminal would have to be handed over as decided by the Cabinet.
He further said that Ranil Wickremesinghe signed an agreement in this regard in 2005 and although some of its provisions had been amended, President Mahinda Rajapaksa had also agreed to hand over the Western Container Terminal to a foreign country.
Opposition from India
However, the Indian High Commission in Colombo had earlier commented to the media on the Cabinet decision regarding the WCT.
“The Government of India hopes that Sri Lanka, India and Japan will expedite the development of the Eastern Container Terminal with the participation of those countries in accordance with the Tripartite Agreement signed in May 2019.
The Government of Sri Lanka has repeatedly informed us of its commitment to in this regard. This has been informed at the leadership level as well. Three months ago, the Sri Lankan cabinet also decided to launch the project with foreign investors.”
What is Western Container Terminal?
The WCT in the Colombo Port is a terminal that has not been built yet.
There are 5 active terminals in the Colombo Port. Jaya Container Terminal, Unity Container Terminal, South Asia Gateway Terminal (SAGT), Colombo International Container Terminal (CICT) and the East Container Terminal. (ECT)
The proposed terminal that has not yet been built is the Western Container Terminal (WCT). Of these, only the Jaya Terminal (JCT) currently operates as a terminal solely owned by the Port of Colombo of the Sri Lanka Ports Authority.
Following is the press release issued by the Government Information Department regarding the Cabinet decision approved yesterday,
“Cabinet approval has been granted on 01.02.2021 to develop the West Container Terminal of Colombo South Port as a Public – Private Limited Company in collaboration with the Sri Lanka Ports Authority and Parties nominated by Indian and Japanese Governments, and also to appoint a Cabinet Appointed Negotiation Committee and a Project Committee to evaluate the proposals in this regard. Accordingly, the Build, Operate and Transfer Plan approved by the Negotiating Committee have been forwarded to the High Commissioner of India and the Embassy of Japan requesting them to nominate investors. The Proposal presented by Adani Ports and Special Economic Zone Limited (APSEZ Consortium) has been approved by the Indian High Commission. No investor has been named by the Japanese government. The Cabinet appointed negotiation Committee has presented their recommendation based on the discussions held between the two parties and accordingly the Cabinet of Ministers approved the proposal presented by Hon. Minister of Ports and Shipping to develop the West Container Terminal on Build, Operate and Transfer basis for a period of 35 years as a public – private partnership with Adani Ports and Special Economic Zone Limited (APSEZ Consortium) and its local representative John Keels Holding PLC (APSEZ Consortium), and the Sri Lankan Ports Authority.”
“A Memorandum of Understanding has been signed between Sri Lanka, India and Japan for the development of the Eastern Container Terminal (ECT) at the Colombo South Port. The Cabinet of Ministers approved the appointment of a Negotiating Committee on 26th October 2020 to evaluate an investment proposal submitted by an Indian investor in accordance with the provisions of the Agreement.
Based on the recommendations made by the Negotiating Committee, the following proposals made by the Minister of Ports and Shipping were approved by the Cabinet.
*Operation of the Eastern Container Terminal as a Container Terminal solely owned by the Sri Lanka Ports Authority.
*With the aim of developing the Port of Colombo as a competitive port in the region and in line with the international agreements signed by the Government of Sri Lanka, taking necessary steps to develop the West Container Terminal on Build, Operate and Transfer basis for a period of 35 years as a public – private limited company, in collaboration with Sri Lanka Ports Authority in collaboration and Government of India and the Government of Japan.”