SL container terminal breakdown: East or West? Who is this Adani?

It is not a question of whether it is the West part of the Port to be sacrificed instead of the East, but to have a clear picture as to who is at the bottom and why

There was much controversy over the proposal to hand over 49% of the shares of the ETC (Colombo Port) to an Indian Company. A name was mentioned and the gravity of the issue was intensified due to questionable nature of the past records associated with this name. 

As far as the public of this country are concerned there is no clarity to date as to what this engagement was going to be. The opaqueness surrounding the issue with half-truths told and expressed political jargon for and against, served only to keep the facts that should be known to remain unknown. 

Was it a development-based assistance? Can’t be, since it is a private company that is involved in the share transaction. Why then the matter is regarded as an operation causing much concern to Indian Government? The only conclusion would be that India is seriously concerned and at the same time a chosen individual should get it. And according to the trade union disclosures a Cabinet paper has been submitted to give it to that private entity. This presumption is further confirmed as announced by the Minister in charge of Port.

The proposed transaction devolved round the sharing of the shares of a company floated to develop the ECT on the basis of 51:49 ownership. According to the Government spokesmen it was neither a sale nor a lease. It is hard to believe that the shares were to be given free for some other consideration. Then it is a sale of shares and as long as the entity survives 49% ownership will continue with the rights of 49% ownership guaranteed by law unless otherwise there are other conditions binding on both shareholders agreed beforehand specifying any special arrangements.

It is here the concerns of the trade unions, social bodies, religious dignitaries become important and relevant regarding the track record of the involved party and to know, how blemished and a chequered past record the party has. Public concern too is focused on this particular aspect to that extent and when we dig into the matter the revealed information is significantly alarming. So now it is not a question of whether it is the West part of the Port to be sacrificed instead of the East, but to have a clear picture as to who is at the bottom and why? Therefore, we lay bare some of the factors discussed in various forums about a company called Adani while reserving our inability to affirm that the Adani disputed in the Sri Lanka ECT matter is the same or a different one.

This consideration is important because now there appears to be some relief and consolation in the minds of those who were vociferously engaged in opposing the ECT being offered on 51-49% basis. We have to refresh their thinking and invite them to look at the issue with a little more dialectical acumen. They seem to think that there is no West terminal now and giving it to someone to develop completely as a new project will be okay. But if the West, which is adjacent to the East terminal, is to be given to the same disputed party, the background we are going to discuss will become important. In a wider interest, public information about the integrity, past operations and publicly shared information available about adverse experiences, of any party to be entrusted with a strategic development project, becomes highly relevant.

Mining giant Adani

The following extract is a summary of a published report of the track record, of a mining giant called Adani based on research into hundreds of court documents by Environmental Justice Australia and Earthjustice and other publicly available evidence.

Adani is an Indian mining and energy company and these revelations came in the context of a contract they were seeking from the Australian government to build the world’s biggest new coal mine in central Queensland Australia. In a public poll 74% of the Australians opposed Adani’s engagement in the proposed project there, due to a sordid past track record available to them about this company. The report published new and previously documented evidence that shows Adani are, at their core, a dangerous, criminal organisation, not fit to be trusted with one of the most environmentally destructive projects in Australian history.

At the time this opposition were building up Adani had a documented history of corruption, bribery, and human rights abuses across the world. It was also facing further criminal investigations for alleged involvement in multi-billion dollar fraud in India.

• In 2011, a ship carrying Adani coal sank off the coast of Mumbai, devastating beaches, tourism and marine life. Adani did nothing to clean up the mess for five years. The report emphasised that Adani can’t be trusted. 
• The report alleged that Adani’s Australian CEO was Director of Operations at another mining company when it poisoned a river in Zambia that people relied on to survive. Adani hid this from the Australian Government.
• There have been deaths, illness and injuries at Adani workplaces. Reports show Adani have exploited and underpaid their workforce, including using child labour. Therefore, they maintain that Adani can’t be trusted to follow the rules and look after workers anywhere. 
• The report pointed out that Adani uses dodgy tax havens in the Cayman Islands to hide assets and revenue; 13 of the 26 Adani subsidiaries registered in Australia are ultimately owned in the Cayman Islands.
• Adani was involved in a bribery scandal that involved bribing customs officials, the police, the State pollution control board and more. Companies who obey the law don’t have to pay bribes.
• Irreversible and irreparable damage has been done to the area by the Adani Port and it is difficult to monitor the extent of the damage today. The mangroves have been destroyed and it has created an environmental disaster. The fisher-folk and common people affected by this degradation cannot fight such a big company.
• In January 2016 Adani was ordered to pay Australian $ 4.8 million for compensation and restoration and had their environmental approval revoked.

Threats and police intimidation in land grab

Media reports from India reveal Adani is using police intimidation, bribery and threats to dispossess people of their land in Jharkhand – where the company wants to build two power plants.

Villagers and government officials say the Jharkhand Government has deliberately undervalued local villagers’ land to allow Adani to acquire the land at a fraction of the land’s real value. One legislator raised the issue in state assembly, contending landowners are expected to receive about one tenth of the value of their land.

Community meetings on the sale of the land have been surrounded by a heavy-handed, intimidating police presence.

Further, this report stated that agreements and commitments it makes appear worthless. This is a company that doesn’t hesitate before breaking the law, contract conditions or moral boundaries in its reckless pursuit of profit.

Adani’s proven track record of environmental destruction, human rights abuses, corruption and illegal dealings should sound a stern warning for any government looking to do business with Adani.

If this is what is happening elsewhere, and the highly controversial nature of the involvements in business activities and projects undertaken by those concerned, our government should think carefully and examine the veracity of these allegations before entrusting any project to them in the country. 

What is currently going on India as a vehement protest action by farmers is a good example. It appears that this company is wielding a lot of favouritism from the Indian Government. This seems to be overflowing into our affairs too. The ECT project has been recommended to them apparently without following any procurement procedures.

Port Development National Policy in India

In the context it is pertinent to examine the current engagements, development plans and ongoing projects in India on port development activities. 

I chose to quote direct from, a report by India Brand Equity Foundation titled ‘Shipping Industry and Ports in India’ last updated 30 December 2020:

• In November 2020, JSW Infrastructure completed the acquisition of Chettinad Group’s port business for ~Rs 1,000 crore ($ 135.50 million). This acquisition will enable JSW Infrastructure to gain ownership and operational control of a deep draft international coal terminal and a bulk terminal at Kamarajar Port Ltd. (KPL) as well as coal and bulk commodity terminal at New Mangalore Port Trust (NMPT).
• In October 2020, Adani Ports and Special Economic Zone Limited (APSEZ) completed the acquisition of Krishnapatnam Port Company Ltd. (KPCL) for an enterprise value of Rs 12,000 crore ($ 1.63 billion)
• In July 2020, Adani Ports and Special Economic Zone Ltd. (SEZ) launched an offshore bond offering, raising ~$ 750 million.
• In November 2019, JSW Infrastructure commissioned a new iron ore terminal at the Paradip port in Odisha with a capacity to handle up to 18 million tonnes of cargo per annum.
• In November 2019, first ever movement of container cargo on Brahmaputra (National Waterway-2), focused on improving the connectivity to North Eastern Region (NER).
• In October 2019, Ease of Doing Business-Implementation of Radio Frequency Identification (RFID) based Port Access Control System (PACS) at Kolkata Dock System (KDS) was introduced.
• JSW Infrastructure entered into built-operate-transfer agreement with Paradip Port Trust at an investment of Rs. 750 crore ($ 107.31 million) to operate Paradip port.
• In August 2019, India became the first country in the world to issue Biometric Seafarer Identity Document (BSID), capturing the facial bio-metric data of seafarers.
• Adani Port and Special Economic Zone (APSEZ) became the first Indian port operator to handle cargo movement of 200 million tonnes (MT) in 2018-19.
• The Indian Minister for Shipping, Road Transport and Highways Nitin Gadkari announced a massive investment in India’s ports and roads sector, which is likely to boost country’s economy. The Indian Government plans to develop 10 coastal economic regions as part of plans to revive the country’s Sagarmala (string of ports) project.
• The zones would be converted into manufacturing hubs, supported by port modernisation projects, and could span 300-500 kms of the coastline. The Government is also looking to develop the inland waterway sector as an alternative to road and rail routes to transport goods to the nation’s ports and hopes to attract private investment in the sector.
• Ports sector in India has received a cumulative FDI worth $ 1.63 billion between April 2000 and June 2020.
• Indian ports and shipping sector witnessed nine M&A deals worth $ 381 million in 2019.

Government initiatives

Some of the major initiatives taken by the Government to promote the ports sector in India are as follows:

• In line with the ‘Make in India’ policy of the Government of India and to boost shipbuilding, the Ministry of Shipping reviewed the ROFR (Right of First Refusal) licensing conditions on 22 October 2020 for chartering vessels/ships through the tender process for all types of requirements. To promote the demand for ships built in India, priority for chartering of vessels is given to vessels built in India, flagged in India and owned by Indians as per amendments in the guidelines of ROFR (Right of First Refusal).
• In October 2020, Union Minister Mansukh Mandaviya inaugurated the ‘Direct Port Entry Facility’ at the V.O. Chidambaranar port. This facility will enable direct movement of containers from factories, without intermediate handling at any CFS (Container Freight Station), facilitating shippers to get their exports directly to the container terminal (24x7), thereby increasing efficiency and ease of doing business.
• In October 2020, the Ministry of Shipping announced plans to develop a National Logistics Portal (Marine) with end-to-end logistics solutions to help exporters, importers and service providers
• n In September 2020, the Shipping Ministry launched a dispute redressal portal, ‘SAROD-Ports’ (Society for Affordable Redressal of Disputes – Ports) to help develop confidence in the private sector, as ports are shifting to landlord models.
• As of November 2019, projects worth Rs. 13,308.41 crore ($ 1.90 billion) were awarded in the last three years on upgradation of the major ports. 
• As per Union Budget 2020-21, the total allocation for the Ministry of Shipping stands at Rs. 1,800 crore ($ 257.22 million).
• Major Port Authorities Bill 2020 was introduced in the Loksabha, which intends to provide regulation, operation and planning of major ports in India and to vest the administration, control and management of such ports upon the Boards of Major Port Authorities and for matters connected therewith or incidental thereto.
• Net profit at major ports increased from Rs. 1,150 crore ($ 178.4 million) in FY13 to Rs. 3,413 crore ($ 529.6 million) in FY18, while operating margin increased from 23% to 44%.
• In May 2018, Ministry of Shipping allowed foreign flagged ships to carry containers for transhipment.
• In March 2018, a revised Model Concession Agreement (MCA) was approved to make port projects more investor-friendly and make investment climate in the sector more attractive.

Achievements

Following are the achievements of the Indian Government in the past four years:

• Turnaround time at major ports stood at 64.69 hours in FY20 (till September 2019).
• Project UNNATI was started by the Government of India to identify opportunities for improvement in the operations of major ports. Under the project, 116 initiatives were identified, out of which 91 initiatives were implemented as of November 2018.

Road ahead

• Increasing investment and cargo traffic point towards a healthy outlook for the Indian ports sector. Providers of services such as operation and maintenance (O&M), pilotage and harbouring and marine assets such as barges and dredgers are benefiting from these investments.
• The capacity addition at ports is expected to grow at a CAGR of 5-6% till 2022, thereby adding 275-325 MT of capacity.
• Under the Sagarmala program, Government has envisioned a total of 189 projects for modernisation of ports involving an investment of Rs. 1.42 trillion ($ 22 billion) by the year 2035.
• Ministry of Shipping has set a target capacity of over 3,130 MMT by 2020, which would be driven by participation from the private sector. Non-major ports are expected to generate over 50% of this capacity.
• India’s cargo traffic handled by ports is expected to reach 1,695 million metric tonnes by 2021-22 according to a report by the National Transport Development Policy Committee.
• Within the ports sector, projects worth investment of $ 10 billion have been identified and will be awarded in the coming five years.

It is not difficult for anyone to understand the magnitude of the competitive arena we are exposed to in this game. Survival is extremely sensitive and subject to severe pressure. Unless we take into account all these factors we will not be able to strike a balance. 

This is why I was compelled to post a comment on a Facebook write-up praising substitution of WCT project in place of ECT as a solution to the controversy, stating, “My dear friend there are many other factors unseen!”