Delay in east terminal cost SLPA Rs. 4 b

• Minister says SLPA to fast-track east terminal development
• Chairman and Board instructed to come up with strategy
• Western terminal also being looked into
• Hambantota deal under the direct purview of Samarasinghe
• Deal will be signed once tabled in Parliament

Ports and Shipping Minister Mahinda Samarasinghe 

By Himal Kotelawala

Delaying the development of the much-discussed east container terminal of the Colombo Port has incurred the Sri Lanka Ports Authority (SLPA) a loss of approximately Rs. 4 billion, according to the minister in charge.

Speaking to an audience of logistics industry leaders at a panel discussion organised by the Chartered Institute of Logistics and Transport (CILT) Sri Lanka last week, Minister of Ports and Shipping Mahinda Samarasinghe said the development of the terminal would be crucial for the long-term sustainability of the SLPA.

“The present Jaya Container Terminal (JCT) has only a 14-metre draft. Internationally we see mergers taking place; we see larger ships being used for the benefit of achieving economies of scale in transport. When big ships call at the Port of Colombo, they can only call the Colombo International Terminals (CICT) Ltd. terminal, which has an 18 m draft,” said Samarasinghe.

The previous Government went through a tender process to develop the east terminal, having obtained Cabinet approval for the project. Samarasinghe said that it was merely a question of implementing it, but the project was put on hold as soon as the new Government came into power.

“We estimate that the loss to the SLPA during these two years is approximately Rs. 4 billion – between Rs. 3.5 billion and Rs. 4 billion. This is money the SLPA could’ve earned quite easily,” he said.

According to Samarasinghe, the Government is now focused on fast-tracking the development process.

“I don’t know what the Government intends on doing at the end of this process. That’s up to the Cabinet to take a collective decision. As the minister responsible for the port, I will always articulate my point of view, but ultimately the Cabinet has to take a collective decision. Until such time, we want to fast-track it,” he said.

The Minister said he issued instructions to newly-appointed SLPA Chairman Dr. Parakrama Dissanayake and the Board of Directors to work out a strategy that would prioritise the development process.

With regard to the controversial Hambantota Port deal, the Minister laid heavy emphasis on his taking ownership of the plans by personally overseeing ongoing negotiations.

“When I took over, I made it clear that negotiations would be handled by me and me only. There were too many cooks earlier; too many people were negotiating on behalf of Sri Lanka. There were contrary statements being made and contrary Cabinet papers being presented. This sent a very wrong signal and confused even the people we were talking to,” said Samarasinghe.

The Minister noted that, viewed in the context of it being one of the largest Foreign Direct Investments (FDIs) to come into the country, getting the promised money was of paramount importance. The monies received could help bolster international reserves, he said, which could then be used to control increase in living costs and to stabilise the rupee where necessary.

“Then of course there is the demonstration effect which will kick in when this kind of huge FDI comes in. There will be others who will look at Sri Lanka seriously,” said Samarasinghe.

The Minister also highlighted the downstream projects being planned, once the future management of the port had been established under a structure that the Government would eventually agree to. There will also be investments that will make their way to the proposed industrial park in Hambantota, he said, adding that when FDIs come in, employment creation and development of the district and the province would also take place.

“We could then embark on an export-led growth strategy, which is the intention of the Government, leading to sustainable development of the country,” he said.

Minister Samarasinghe also noted that the SLPA had spent nearly $ 175 million out of its own generated funds in servicing the loan taken to build the Hambantota Port.

“The loss the port incurred in 2015 was Rs. 18 billion. Fortunately this came down to Rs. 10 billion in 2016. All of this has been shouldered by the SLPA. The servicing of the loan has been 100% shouldered not by the Treasury but by the SLPA,” he said.

If the proposed strategic partnership is put in place, he said all that money could be saved and be utilised for the development of the JCT as well as the eastern terminal. 

The Minister revealed that the Government was also looking at potentially developing the western terminal depending on the load factor.

Samarasinghe said he had consulted his colleagues Ministers Malik Samarawickrama and Sarath Amunugama who had been previously involved in the matter and predecessor Arjuna Ranatunga and instructed SLPA Chairman Dr. Dissanayake to discuss the nitty-gritty of the agreement.

“We’re working as a team, but I have taken the negotiations into hands and I’m responsible now. We’re confident that we’ll be able to put in place an eventual agreement that will not compromise the national interest of the country. That is the bottom line as far as I’m concerned. National interest can never be compromised,” he said.

The Hambantota deal has raised major geopolitical concerns, which Samarasinghe dismissed as some countries getting “overly excited”.

“Some countries have gotten overtly excited, in my opinion. Of course they’re entitled to their point of view – which they have come and put forward to me. That’s the way they see things, but I have assured them that we’ll ensure the national interest is not compromised,” he said.

The Minister also stressed that no laws of the land would be amended to facilitate an FDI, and the country’s laws and constitution would be respected. 

“The security aspects will not be compromised in any way. The Navy will continue to discharge its mandate, the SLPA will discharge its mandate. The Ports Authority Act will not be amended to suit a particular situation. We have to ensure that whatever we do is applicable to everyone – the laws of this country cannot be amended just to facilitate an FDI,” he said.

A solution has been found that appears to be acceptable both parties, according to Samarasinghe. 

“I don’t see any major issues now on the table. I’m quite confident we’ll be able to finish this off very soon,” he said.

A draft of the proposal will be shared with the President and the Prime Minister – concerns raised by President Maithripala Sirisena, according to the Minister, have been acceptable to the Chinese and have been incorporated into the draft. Once the Attorney General has had a look at it, the draft will be presented to the Cabinet of Ministers under Samarasinghe’s signature, and once Cabinet approval has been obtained, the agreement will be signed.

“I also want to be transparent in this exercise, because this whole agreement has been facing a lot of controversy, a lot of interest has been generated in society. I want to place the agreement before Parliament, so that it’s a transparent exercise that we will embark on,” he said.