Cabinet proposal by Minister Johnston Fernando Partnership between India’s Adani, JKH, and SLPA BY MAHEESHA MUDUGAMUWA Despite vehement opposition from the ports trade unions, a cabinet proposal has been submitted by the Ministry of Ports and Shipping, seeking the Cabinet’s approval to recognise the proposal submitted by India for the development of the East Container Terminals (ECT). The proposal has been submitted by Adani Ports and Logistics – one of India’s largest integrated infrastructure conglomerates with interests in resources, logistics, energy, and agro – on the recommendations of the Indian Government during the tenure of the previous Government. Also, it has been revealed in the Cabinet Memorandum No. MPSSD/2019/01/29(V) submitted on 9 June, as seen by The Sunday Morning, that the new Government had informed the governments of Japan and India that it will honour the Memorandum of Corporation (MoC) signed by the previous Government on the condition that the Government of Sri Lanka or Sri Lanka Ports Authority (SLPA) will not borrow further or provide guarantees but will support foreign direct investment (FDI) in the ECT while maintaining 51% of equity share in the terminal operations company (TOC) of the ECT. Sri Lanka has signed a MoC for the development of the ECT with India and Japan on the discussions among heads of governments in 2017/19 and on the cabinet decisions taken on 30 May 2019. The MoC provides for the formation of a TOC, of which 49% is jointly held by Japanese and Indian shareholders while 51% is held by the SLPA. In terms of the MoC, the TOC was to develop the ECT based on a Japanese loan to the SLPA guaranteed by the Government of Japan. However, since mid-June, there has been vehement opposition by trade unions attached to the SLPA for handing over the development of the ECT to India and Japan. Instead, the unions have urged the Government to hand it over to the SLPA. By submitting the cabinet proposal, Minister of Ports and Shipping Johnston Fernando has sought the approval to appoint a Cabinet-Appointed Negotiation Committee (CANC) consisting of Secretary to the Ministry of Ports and Shipping M.M.P.K. Mayadunne, Secretary to the Ministry of Roads and Highways R.W.R. Premasiri, Secretary to the Ministry of Power and Energy Wasantha Perera, Board of Investment of Sri Lanka (BOI) Director General Dr. Sanjaya Mohottala, and SLPA Managing Director W.S. Weeraman. Furthermore, the Minister has sought the approval of the Cabinet to authorise the Secretary to the Treasury to appoint a project committee to assist the CANC and the SLPA Board of Directors to proceed with the formation of the proposed TOC corporate structure under the Companies Act No. 07 of 2007 (19A). In addition, in his cabinet proposal, Fernando had further requested the approval to grant concessions under strategic investment law, following the due process and consistent with the concessions extended to the Colombo International Container Terminals (CICT). According to the Cabinet Memorandum No. MPSSD/2019/01/29(V), Adani Ports and Special Economic Zone Ltd. (AP SEZ) has entered into a strategic partnership with John Keells Holdings PLC (JKH) to submit the proposal to develop and operate the ECT in the Colombo Port together with the SLPA by forming a public-private partnership (PPP). Fernando in his cabinet proposal has stated that the presence of Japan and India in the Colombo Port will improve its business outlook and value through transhipment activities, drawing Indian and Japanese cargo, and that it will also add further competition to the south terminal owned by CICT, with SLPA being the majority shareholder. However, speaking to The Sunday Morning, All Ceylon Port General Workers’ Union (ACPGWU) General Secretary Chandrasiri Mahagamage stressed that the present Government is now attempting to convert the MoC signed by the previous Government to a Memorandum of Understanding (MoU), which has legal implications. He also pointed out that the Government was trying to mislead the public by appointing the same set of people to evaluate the ECT development project and negotiate the agreements with India’s Adani for the development of the ECT. Pointing to the committee appointed by President Gotabaya Rajapaksa on 3 July, Mahagamage said: “This is an attempt by the Government to totally mislead people.” The five-member committee appointed by the President consists of the Secretaries of the Ministries of Power and Energy, Ports and Shipping, and Roads and Highways together with Secretary to the Ministry of Industrial Export and Investment Promotion M.P.U.D. Mapa Pathirana and SLPA Chairman General (Retd.) Daya Ratnayake. The committee is supposed to look into matters with regard to the procurement process and the delay in development of the ECT prior to importing equipment, to evaluate the agreements entered with other foreign nations by the SLPA, and to look for the responsible persons for the activities mentioned above. Moreover, the committee was requested to submit proposals for the development of the ECT. The committee was also requested to prepare a report within 45 days from 3 July. Meanwhile, when contacted by The Sunday Morning, Co-Cabinet Spokesperson Dr. Bandula Gunawardana said the Cabinet had not yet taken up the proposal submitted by the Ministry of Ports and Shipping with regard to the development of the ECT. “Memos are continuously submitted to the Cabinet, but only selected ones are chosen for discussion,” he said. When asked whether the Cabinet had rejected the cabinet memo submitted by Fernando, Dr. Gunawardana said the Cabinet had not yet taken up the matter. Furthermore, he noted that the Government had not yet taken a final decision with regard to the development of the ECT.