Talks with India on ECT ongoing: Bandula

Friday, 24 July 2020 02:00 -     - {{hitsCtrl.values.hits}}

Cabinet Spokesman Bandula Gunawardana yesterday said that the Government was continuing discussions with India on the development of the East Container Terminal (ECT) and there was no inclination to push forward to a swift conclusion. 

His comments come after port trade unions held a protest on Wednesday, demanding that the development of the ECT be handed over to the Sri Lanka Ports Authority.   

“This President and this Government does not get emotional of excited about these kinds of issues. It was the previous Government that signed this agreement. So there will continue to be engagement using diplomatic channels regarding this issue. Problems will be solved through talks, we are not hurried about this.  Whether it is India, China or another country diplomatic engagement will happen,” he said. 

The protests by the unions this week was the second. In the first round of protests earlier this month, President Gotabaya Rajapaksa appointed a high level committee to look into issues surrounding both ECT and State-run Jaya terminal, and Prime Minister Mahinda Rajapaksa promised unions to discuss this issue at Cabinet level, that Sri Lanka could potentially desist from a tripartite agreement with Japan and India signed last year. But the unions insists these efforts are insufficient. 

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

The agreement was signed during the tenure of former Ports Minister Sagala Ratnayaka. However, former Ports Minister Mahinda Samarasinghe, who held the portfolio before Ratnayaka, and former President Maithripala Sirisena, had earlier promised the SLPA trade unions that the ECT will be built and operated by the SLPA. 

The unions contend that if the ECT is given to a foreign company, then the SLPA will not have a deep water terminal capable of berthing large ships, and will eventually lose out to the other two privately-operated terminals. 

Colombo International Container Terminal (CICT) is currently operated by a Chinese company and the South Asia Gateway Terminal is run by conglomerate John Keells Holdings. JCT, which is the oldest of the three terminals currently under operation, is not deep enough to compete with the other two terminals. Shipping experts have long warned that the much-delayed ECT was urgently needed to keep the Colombo Port competitive and continue its hub status in South Asia. But efforts to make it operational since 2015 have largely failed to take off. 

According to the SLPA, the MoU signed under the former Government states that the SLPA retains 100% ownership of ECT. 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 $ 500-800 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 ventures. 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) that was presided over by former Prime Minister Ranil Wickremesinghe.