ECT at seashore of proposals
Ports and Shipping Minister Sagala Ratnayake is likely to seek cabinet approval to procure equipment for the East Container Terminal (ECT) amidst another pending proposal for a Japan-India-Sri Lanka consortium to run it. It is learnt that Indian and Japanese involvement with a minority shareholding by the Sri Lanka Ports Authority (SLPA), proposed about four months back, is also under review.
The Japanese government had submitted an MOU with the said proposal stating that they were willing to provide equipment free of charge on the condition that it would be managed by a consortium comprised of Japan and India with SLPA as a minority stakeholder.
Minister Ratnayake’s proposal is similar to the proposal made by his predecessor, former Minister Mahinda Samarasinghe submitted about three months back to the cabinet for approval to purchase equipment for the commissioning of the ECT.
The equipment stated was to procure five ship-to-shore cranes, 15 RTGs using SLPA funds.
However informed sources raised the issue as to how such procurements could be made by the state agency when it is already a debt-ridden entity.
Purchasing of the container handling cranes was estimated to cost around US$80 million and a further cost of construction of the full terminal of 1200 metres at over $400 million. This would be highly insensitive in respect of its commitments in investments made for the Jaya Container Terminal (JCT), the Kankesanthurai (KKS) and Oluvil ports at over US$150 million.
The previous cabinet paper submitted by Mr. Samarasinghe was rejected by the Finance Minister Mangala Samaraweera who had then proposed the establishment of the said consortium.
The government is learnt to have made commitments to run the terminal as a Public Private Partnership (PPP) arrangement.
At the time it was noted that the viability of the SLPA could improve if ECT is carried out as a PPP with a larger minority stake of at least 40 per cent by capitalizing the existing asset compared to the 15 per cent shares it obtained from CICT and SAGT.
Minister Samaraweera had then proposed that based on the commitments made to the two states they need to allow the governments of India and Japan to identify strategic partners who will own a controlling stake in the PP Special Purpose Vehicle (SPV) that will lease the ECT and operate on a BOT basis for a 35-year period, similar to existing PPPs in the Port of Colombo.
Moreover, SLPA requires ownership of a deep-water terminal to handle ultra-large-container vessels (ULCV). At present less than 10 per cent of the total ships handled in Colombo are UCLVs.
In the meantime the 2016 Expression of Interest (EOI) calling for tenders to procure the equipment during former Minister Arjuna Ranatunga’s tenure is likely to face closure once the new proposals gain approval from the government.