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East Container Terminal: Adani stake to increase later?

24 Dec 2020

  • Clause in MoC worries trade unions 

  • Original stake expected to be 49%

By Dinitha Rathnayake   Trade unions attached to the Colombo Port are agitated over a clause in the Memorandum of Contract (MoC) of the East Container Terminal (ECT) which leaves room for the Government to increase the shareholding of its private partner following the signing of the partnership agreement. India's largest port developer Adani Group is the frontrunner to become the partner of the ECT of the Sri Lanka Ports Authority (SLPA), with SLPA having shares of 51% and Adani holding 49%. Therefore, the unions have expressed concern that the Government could rely on this clause to increase Adani’s shareholding long after signing the agreement to make the company the majority shareholder. Clause 1.4 (b) of the MoC for the development of the Colombo South Port in Sri Lanka states that “a change in the share structure can be done only with prior approval of the Government”. Progressive Workers Association for Commercial Industry and Services (PWACIS) Chief Secretary Shamal Sumanarathna told The Morning that this clause could be used by the Government to mislead people.   “We have a suspicion that the Government will try to change the share allocations in future. According to the MoC, the Sri Lankan Government will have a 51% stake and the other party will have a 49% stake in the ECT, but the Government could mislead everyone by using this clause.” Sumanarathna added that if the Government tries to sell this to the Adani Group or any other company, the trade unions have lined up all port employees to oppose it and safeguard the port. The Trade Union Collective to Protect Colombo Harbour East Terminal held a meeting on Tuesday (22) with Minister of Ports and Shipping Rohitha Abegunawardena to get a clear idea about the Cabinet memorandum and committee appointed to evaluate the MoC.  According to the Collective’s Convener Sanjaya Kumara Weligama, the discussion was not particularly productive, and the Collective had requested the Minister to grant them a meeting directly with President Gotabaya Rajapaksa.  “Minister Rohitha Abegunawardena actually approved our request and told us that he will arrange a date to meet the President after the Christmas holidays,” Weligama said.    When The Morning contacted SLPA Chairman General Daya Ratnayake, who also took part in the meeting, he referred us to Minister Abegunawardena for any comment on the shareholding increase clause. However, he categorically denied the sale of ECT to a foreign entity. “There are no plans to sell the ECT of Colombo Port to any foreign country. The Government has appointed two committees to evaluate the development scope and interests expressed by various companies and to submit reports. Based on the recommendations of those committees, the Government will make a final decision,” he stated.  When The Morning spoke to the Ministry of Ports and Shipping Secretary U.D.C. Jayalal, he said there will be no change in the share structure in future and that the stakes will remain as 51% for the Government and 49% for the other party.    “This is the final stake and if the Government wants to change it, there is a huge process involved which includes parliamentary approval. No Cabinet approval has been given for India to develop the ECT, but two committees have been appointed to evaluate its development, including already forwarded proposals and investment opportunities for local companies.” However, Times of India recently reported that the Adani Group is all set to develop Sri Lanka’s port terminal and The Hindu website also reported that Colombo seems to be under great pressure from New Delhi to go ahead with this project. All attempts to reach Minister Rohitha Abegunawardena for comment proved futile, however, last week the Minister explained the decision to partner with Adani.  “We have no suitable local investor for the purpose, though the Government would appreciate local investment for the development of the East Container Terminal. However, ECT development will go ahead with Adani as the Government of India has proposed the Adani Group, India’s biggest ports and logistics company and a multinational conglomerate.” Adani Ports and Special Economic Zone Ltd. is the largest commercial ports operator in India and India’s biggest private port operating firm accounts for nearly one-fourth of the cargo movement in the country. It recently signed a Memorandum of Understanding (MoU) with MMC Ports to set up a container port in Carey Island, Malaysia where the Adani group eyes for global expansion.


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