Adani Ports-led consortium gets LoI to build west container terminal at Colombo Port

A consortium led by Adani Ports and Special Economic Zone Ltd (APSEZ) has received a letter of intent from the Sri Lankan government to build and run the West Container Terminal (WCT) at Colombo Port with an investment of some $1billion.

India has been looking for a terminal presence in Colombo port — a regional transhipment hub through which a large portion of India’s export-import cargo containers are transhipped — for strategic and security considerations.

On March 1, the Sri Lankan Cabinet approved the development of WCT on a government-to-government agreement with India.

“The letter of intent was issued to APSEZ on Monday,” a government official with knowledge of the development said, asking not to be named.

APSEZ will own majority stake of 51 per cent in the terminal, while local partners John Keels Holding PLC will hold 34 per cent and the Sri Lanka Ports Authority (SLPA) will have the balance 15 per cent equity.

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

The WCT deal is structured 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 SLPA holds the remaining.

It will be developed on a build, operate and transfer (BOT) format for a concession period of 35 years.

With APSEZ and John Keels Holding together holding 85 per cent 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 APSEZ-led consortium flexibility to operate in a commercially competitive manner in line with other private operators in Colombo Port,” said a shipping industry consultant.

Colombo Port is the most preferred regional hub for transshipment of Indian containers and mainline ship operators.

Indian transhipment containers accounted for 45 per cent or 2.5 million twenty-foot equivalent units (TEUs) of Colombo’s total container transhipment volume of 5.6 million TEUs in FY19.

For many years, India has been trying to cut its dependence on Colombo to send and receive container cargo and save extra time and costs for India’s exporters and importers, but without much success.

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