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East Container Terminal: India-SL on collision course?

02 Feb 2021

  • Cabinet approves retaining 100% ownership

  • India insists on original 49%-51% split

  India and Sri Lanka appear to be on a collision course with regard to the East Container Terminal (ECT) of the Colombo Port, with the Cabinet of Ministers late last night approving a proposal to retain 100% ownership of the terminal with the Sri Lanka Ports Authority (SLPA). This approval was granted a few hours after the Indian High Commission in Colombo asked all sides to abide by the existing understandings and commitment of a trilateral agreement involving Sri Lanka and Japan to develop the ECT. The state-owned SLPA signed a Memorandum of Co-operation (MoC) in May 2019 with India and Japan to develop the ECT during the tenure of the Yahapalana Government. “I would like to reiterate the expectation of 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," a spokesperson at the Indian High Commission in Colombo according to PTI. “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. 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,” the spokesman added. According to Minister of Ports and Shipping Rohitha Abeygunawardena, the Cabinet approved all six proposals in a letter sent to the President by the Trade Unions’ Collective to protect the ECT on Friday (29). The proposals were as follows:
  1. The ECT’s constructed areas which have so far been constructed to be fully owned and operated by the SLPA
  2. From the SLPA reserves of $ 250 million, invest $ 100 million in the aforementioned developed area of the ECT to be fully used for operations by the SLPA
  3. Complete the construction of the remaining areas of the ECT in three years under the SLPA and following the expiration of the SAGT (South Asia Gateway Terminals) agreements in 2029, that this terminal also be taken over and operated by the SLPA
  4. Agree to any future government initiatives to grant positive investments in the West Container Terminal (WCT)
  5. Seek Cabinet approval for the ECT to be 100% fully operated and managed by the SLPA
  6. Seek the necessary Cabinet approval for the development of the ECT and the WCT
Earlier on Monday (1), the Prime Minister’s Office said the Sri Lankan Government has decided to run the ECT as a fully owned operation of the state-run Ports Authority, succumbing to pressure from the trade unions that opposed the joint venture to develop the strategic cargo terminal. The Colombo Port trade unions have long opposed the trilateral ECT deal and the recent proposal to provide the Adani Group of Companies, India’s largest port operator, a 49% stake in the ETC, demanding the ECT remain 100% owned by the SLPA. The Morning reported yesterday (1) that the Government is likely to offer a majority stake in the WCT of the Colombo Port to India in order to retain 100% ownership of the ECT. The shareholding is likely to be split in a way which allows India to match the shareholding that China has in Colombo International Container Terminals (CICT), where China’s state-owned China Merchant Port Holdings (CMPH) enjoys an 85% stake. It is unclear whether today’s statement by the High Commission means this proposal has been rejected by India and Adani due to the fact that the WCT would need to be developed from scratch.


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