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President Gotabaya Rajapaksa
Prime Minister Mahinda Rajapaksa
Ports and Shipping Minister Rohitha Abeygunawardena
By Charumini de Silva
The Government yesterday decided to rely on a “domestic deal” for the crucial development of East Container Terminal (ECT) in Colombo Port, snubbing India and Japan with whom Sri Lanka (SL) had signed a tripartite agreement to enhance the maritime hub status in South Asia.
Ending weeks of impasse, the Cabinet of Ministers yesterday unanimously agreed ECT must and can be developed by the Sri Lanka Ports Authority (SLPA) which has already invested around $ 100 million to partially operationalise it in October last year.
Ports and Shipping Minister Rohitha Abeygunawardena said India’s port giant Adani Group, which was to spearhead ECT development, had backed out of agreeing to conditions imposed by the Cabinet Appointed Negotiating Committee (CANC).
“As a responsible Government we were keen to ensure the country gets the best benefit if developing the ECT. The Japanese support was also by way of a loan which President Gotabaya Rajapaksa wasn’t keen,” the Minister said. It was emphasised that the SLPA will be able to develop the ECT to its fullest potential by 2023, whilst the overall master plan of Colombo Port includes West Terminal one and two as well as North Terminals one to three.
“Following the unsuccessful rounds of discussions with the Indian party, I held a special meeting with President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa, where they both agreed on 100% retention of ECT under SLPA. Thereby, the ECT will be developed to be a critical terminal at Colombo Port by 2023,” the Minister said.
“With ECT, we will move towards strengthening Sri Lanka’s status as a maritime hub,” Minister Abeygunawardena added.
He also said that the trade unions agreed to develop and retain ECT under SLPA, whilst agreeing to develop West Container Terminal of the Colombo Port with an external investor.
The Cabinet decision was after Prime Minister Mahinda Rajapaksa renewed the reassurance to trade unions that ECT will not be sold or leased to outside parties.
“I have never committed in writing to any trade union action in my political history spanning to 50 years, but if I give my word, I will live up to it and that is my assurance to all of your concerns — that the ECT will remain and developed under SLPA and the Cabinet approval will be given for it,” Prime Minister told Trade Unions yesterday.
India yesterday indicated that SL should abide by the tripartite agreement on the ECT signed in May 2019 and further approved by the current Cabinet of Ministers three months ago. In response to the announcement by Prime Minister Mahinda Rajapaksa that the ECT will not be sold or leased, a spokesman for the Indian High Commission said his country would like to reiterate the expectation of the Government of India for the expeditious implementation of the trilateral Memorandum of Cooperation (MOC) signed in May 2019 among the Governments of India, Japan and Sri Lanka for the development of ECT with participation from these three countries.
“The commitment of the Government of Sri Lanka in this regard has been conveyed several times in the recent past, including at the leadership level,” the Spokesman said.
“Sri Lanka’s Cabinet also took a decision three months ago to implement the project with foreign investors. All sides should continue to abide by the existing understandings and commitment.”
Immediately after the discussion with the Prime Minister, SLPA Chairman Major General (Retd.) Daya Ratnayake requested all trade unions to report to work as soon as possible.
“The assurance to all your concerns has been given by the Prime Minister, now it is your duty to show up at work. We have retained the services of the Colombo Port with greatest difficulties. Therefore, get back to work as you go,” Ratnayake said.
However, unions said until they see the cancellation of the October 2020 Cabinet decision, they will continue with the ‘work-to-rule’ campaign, but said the Cabinet decision to retain ECT under SLPA was a great success of their trade action.
“We will continue with the work-to-rule campaign until we see the Cabinet paper in writing and announced at the Cabinet briefing meeting today,” Trade Unions to Protect the ECT Convener Niroshan Gorakanage told the Daily FT.
Deshaya Surakimu National Organisation Chairman Ven. Elle Gunawansa Thero said they have decided to stop all planned phase two actions and will only announce their stance after a thorough evaluation of the Cabinet paper on ECT today.
“We do not want to jump the gun. There are so many that are wanting to take the credit for stopping the ECT being given to India. We will only respond after a thorough check on the Cabinet paper. Our fight was on 100% retention of the ECT under SLPA and our stand will remain the same today and tomorrow,” Ven. Gunawansa Thero said.
Industry analysts said that ECT’s full blown development is estimated to cost over $ 600 million as per proposal by the India-SL-Japan consortium and it will be challenging for SLPA.
As reported by the Daily FT yesterday, analysts said the West Container Terminal (WCT) option is open for consideration but they were unsure whether India will agree. They claimed that Japan may be open as it is also keen on a Liquefied Natural Gas (LNG) terminal adjacent.
Trade unions, as well as a host of political parties aligned to the Government, have opposed the tripartite deal on the basis that the new Rajapaksa leadership promised once elected not to sell state assets and revoke the Yahapalanaya regime move. They also argued that India may not be a good partner for the ECT project given its own ambitions to attract major shipping lines directly via its massive expansion and modernisation of its ports.
However, shipping experts said that India is the biggest source for Colombo’s main business of container transhipment; hence there were more beneficial synergies than disadvantages.
The consortium is led by India’s biggest port operator Adani, and its local partner John Keells Holdings PLC (JKH) also currently manages and part owns the South Asia Gateway Terminal (SAGT). Unions fear that if the tripartite deal goes through, JKH will have an undue advantage over SLPA and JCT by virtue of managing and part owning two terminals.
The China-funded Colombo International Container Terminal (CICT) and State-owned SLPA’s Jaye Container Terminals form the overall offering at Colombo, which urgently needs capacity expansion to cater to bigger ships in service and on future order.
