Adani Ports to Develop West Container Terminal at Colombo Port

· Labour Union and Govt Resistance Overcome

Adani Ports and Special Economic Zone Ltd (APSEZ) will develop the West Container Terminal (WCT) at Colombo Port after the Sri Lankan cabinet on Monday approved the plan through a tripartite understanding with India and Japan, government sources briefed on the deal said.

The WCT will have a 1,400-metre quay wall, water depth of 20 metres, terminal area of about 64 hectares with an annual capacity of 2.6 million TEUs.

India and Japan will jointly own 85 % stake in the planned WCT, on the lines of the Colombo International Container Terminals Ltd (CICT), in which China’s state-run China Merchants Port Holdings Company Ltd holds 85 per cent stake and Sri Lanka Ports Authority (SLPA) holding the balance.

The WCT, the fifth container terminal at Colombo Port, is being offered to India and Japan after the Sri Lankan Cabinet on February 1 scrapped a tripartite memorandum of cooperation (MoC) signed in May 2019 with the two nations to jointly develop the East Container Terminal (ECT) at Colombo Port.

The move followed strong resistance from the port unions to allow the Indo-Japan partnership to develop ECT. According to cabinet documents, the cabinet also cited the lack of flexibility shown by the Indian firm in “adhering to the key financial clauses” set by the island nation.

During the February 1 Cabinet meeting, Sri Lanka’s Ministry of Ports and Shipping also proposed “to develop the West Container Terminal (WCT) in parallel with the ECT as a Public, Private, Partnership (PPP) project under BOT basis for 35 years by a joint venture comprising SLPA and nominees of the government of India and Japan based on the framework used in developing the CICT”.

The CICT framework included a BOT tenure of 35 years, one-time upfront payment, an annual payment of land lease and royalty based on the containers handled at the terminal.

Based on the CICT framework, it was decided by the then Sri Lanka government that this “model could be successfully used for development of subsequent container terminals, revisiting the payments to be received by SLPA based on comparative size of the terminal area and improved business opportunity in the port of Colombo”.

By holding an 85% stake, the WCT will not be treated as a government-owned company under Sri Lankan law and hence not subjected to the auditor general of Sri Lanka, not answerable to the Parliament of the island nation and will not have to follow the public procurement procedures of the government.

This will give the Indo-Japan team operational flexibility to operate commercially in line with other private operators.