• Likely to have significant stake in JV with Adani of India and its interest in Colombo Port extending beyond existing SAGT

By Nisthar Cassim

Premier blue chip John Keells Holdings PLC (JKH) has got a big boost via the Government’s move on the proposed West Container Terminal (WCT) in the Colombo Port following the Cabinet decision. 

Company and industry analysts said JKH is likely to have a significant stake in the joint venture with Indian giant Adani within the 85% stake offered for a SL-foreign private sector consortium.

 The balance 15% stake will be held by the Sri Lanka Ports Authority (SLPA). A similar shareholding structure is prevalent in the two other terminals in the Colombo Port, the South Asia Gateway Terminal (SAGT) and the Colombo International Container Terminal (CICT).

The Government has despatched BOT agreements to India and Japan in a bid to fast track the development. 

Last month Ports Minister Rohitha Abeygunawardena assured that ECT and WCT will be fully developed by 2023. 

The breakthrough on West Terminal also means JKH’s interest in the port sector extending beyond the existing SAGT, the Build Operate and Transfer (BOT) agreement for which is 30 years. The WCT like the CICT will have a 35-year period. 

In a bearish market with sharp dip in indices, investor response to the breakthroug was muted with JKH share price yesterday gaining by only 50 cents to close at Rs. 154 but on a volume of just a very low 166,945 shares.

The 85% stake as well same terms, conditions, rates, royalty and land lease payments to SLPA, were among the conditions Adani and JKH put together to secure the East Container Terminal (ECT). However, the government rejected it on the basis that conditions were different then and decided to develop ECT via SLPA. Sri Lanka also asked for a “golden shareholder status” to the government in “strategic national interest”.

The ECT comprise 1,320 metres of quay wall, terminal area of 76 hectares, 18-metre-deep berths and container stacking yard with an annual capacity of 2.4 million twenty-foot equivalent units (TEUs). The SLPA has developed 440 metres of quay wall, 20 hectares yard area and connected facilities with a $ 80 million loan from the Bank of Ceylon.

The WCT will have a 1,400-metre quay wall, water depth of 20 metres, terminal area of about 64 hectares with annual capacity of 2.6 million TEUs.

Shipping industry analysts opined that had JKH-Adani consortium got ECT the returns would have been better and faster by virtue of it being partially developed and operationalised, apart from being closer to SAGT. However, it may not have been attractive under revised conditions and in that context the WCT, despite likely to take longer, would remain favourable with higher equity stake and other concessions.

Cabinet green light for WCT India-SL-Japan JV