Sri Lanka Ports Authority (SLPA) Chairman Gen. Daya Ratnayake speaking to reporters yesterday. He is flanked by South Asia Gateway Terminals (SAGT)  Operations General Manager Upul Jinadasa (left) and Colombo International Terminals (CICT) Senior Berthing Manager Rohan Ranasinghe (right) 

• Denies speculation over Indian involvement, insists scope for local investors remains
• SLPA Chief says private sector-led development model best
• Asserts Indian company’s involvement will attract business
• Says Japan still part of MoU signed during former Govt.

By Charumini de Silva

The Government yesterday denied speculation over Cabinet approval being given for India to develop the long-delayed East Container Terminal (ECT), but two committees have been appointed to evaluate its development, including already forwarded proposals and investment opportunities for local companies.

Sri Lanka Ports Authority (SLPA) Chairman Major General (Retd.) Daya Ratnayake categorically said that the Government was firm on its decision not to sell State property or sign up for more large-scale loans to develop ECT.

“There are no plans to sell the ECT of Colombo Port to any foreign country. The Government has appointed two committees to evaluate the development scope and interests expressed by various companies and to submit reports. Based on the recommendations of those committees, the Government will make a final decision,” he told journalists yesterday.

The SLPA Chief also said that there was scope for local companies to express their interest to develop the ECT.

In May 2019, the former Government entered into a tripartite Memorandum of Understanding (MoU) with Japan and India to build the ETC. Under that agreement Japan was to provide a loan of $ 500 million and India was to do the construction.

He believes the private sector-led development model is the best, as SLPA-funded initiative would be costly to the Government.

“South Asian Gateway Terminals (SAGT) and Colombo International Container Terminals (CICT) are proven and successful Public-Private Partnerships. The Government is not planning to obtain any loans to develop ECT, as we are not in a position to pay back,” he said.

Colombo Port currently has three main terminals CICT — currently operated by China Merchant and SLPA joint venture; SAGT — run by consortium led by John Keells Holdings and includes global giant Maersk as well SLPA; and JCT — entirely run by State-owned SLPA.

When asked if the potential Indian company would be advantageous for the country, Ratnayake said it would definitely benefit to involve competitors in the system, noting that 61% of the total 82% transhipment business was generated from India.

“If an Indian company gets involved, we can retain and expand our current businesses by attracting large shipping lines and volumes from India. There are a lot of ports in our region and there is severe competition,” he stressed.

India’s Adani Group is the frontrunner to develop Sri Lanka’s stalled East Container Terminal in Colombo Port.

Reiterating that no final decision had been made in this regard, the Chairman said that the Government would assess all criteria and select the best model for the country’s advantage.

He was of the view that the MoU signed by the previous Government was not a wise decision, claiming that they were planning on a colossal loan and handover majority of the operations to the funding party. 

The Chairman also confirmed that Japan had not pulled out from the original MoU.

Shipping experts have long warned that the much-delayed ECT was urgently needed to keep the Colombo Port competitive and hub status in South Asia. But efforts to make it operational since 2015 had largely failed to take off.

According to the SLPA, the MoU signed under the former Government states that the SLPA retains 100% ownership of ETC. The Terminal Operations Company (TOC), which will be responsible for all operations within the terminal, will be jointly owned by Sri Lanka, Japan, and India. Sri Lanka will maintain a 51% stake in the company, while Japan and India will hold minority stakes of 34% and 15% respectively. 

Development of the ECT was to be financed by Japan through a 40-year soft loan of between $ 500 million to $ 800 million. The loan will be at a 0.1% interest rate with a grace period of 10 years. Other experts had also pushed for the ECT to be developed as a Public-Private Partnership venture. 

Tenders that were called in early 2015 also led to a dead end with all bidders eventually disqualified by the Cabinet Committee on Economic Management (CCEM) presided over by former Prime Minister Ranil Wickremesinghe.

Costly return to normalcy for Colombo Port