Adani WCT deal signed
- First Indian firm to operate Sri Lankan Port
By Shahaen Vishak
India’s Adani Group yesterday (30) signed a build-operate-transfer (BOT) agreement with its local partner John Keells Holdings (JKH) and the Sri Lanka Ports Authority (SLPA), to jointly develop the West Container Terminal (WCT) of the Colombo Port.
JKH, in a stock exchange disclosure, noted that the project is expected to cost $ 650 million, with the BOT agreement set for a lease period of 35 years among the above stakeholders. Of the estimated project cost, JKH estimates an equity infusion of $ 70 million on its part, which will be infused into Colombo West International Terminal (Pvt.) Ltd. (CWIT), which is the project company incorporated to undertake this investment.
Accordingly, CWIT will be jointly owned by SLPA, JKH, and Adani Ports and Special Economic Zone Ltd. (APSEZ), which is the arm of the Adani Group handling this project. The SLPA will hold a 15% equity stake in CWIT, while JKH will hold 34%, and APSEZ will hold 51%, making it the first-ever Indian port operator in Sri Lanka.
JKH noted that the debt funding for the project has been secured, subject to the closure of the related financing documents, which will be completed prior to project commencement.
In March, the WCT of the Colombo Port was approved to be developed as a public-private limited company in partnership with APSEZ, along with JKH as its local representative, and the SLPA. This came on the heels of the Government reneging on a deal with India and Japan to jointly develop the East Container Terminal (ECT) of the Colombo Port, due to opposition over concerns of a strategic national asset being subject to foreign ownership.
The cancellation of the ECT agreement, which had been promised in 2019, caused ripples in Sri Lanka’s relationships with both India and Japan, and the WCT agreement with India is thus seen as a sort of compromise, although the current deal only sees the involvement of APSEZ as a private firm, meaning the Indian Government is not officially involved.
The proposed WCT port terminal will have a quay length of 1,400 m and a depth of 20 m, making it a prime trans-shipment cargo destination to handle ultra-large container carriers, according to the filing from APSEZ. Further, a considerable volume of throughput at the Colombo Port has been linked to Indian business, according to Indian media, making it a highly valuable asset.