India’s Adani Ports and Special Economic Zone (APSEZ) will begin construction work on the West Container Terminal (WCT) at Sri Lanka’s Colombo port by yearend, media reports say
India’s Adani Ports and Special Economic Zone (APSEZ) will begin construction work on the West Container Terminal (WCT) at Sri Lanka’s Colombo port by yearend, media reports say. The group will hold a 51 percent stake in the terminal under a deal likely to be signed in November. The company is expected to invest over $675.68m in the project which was offered after the Sri Lankan government earlier this year had scrapped the tripartite agreement on the lucrative East Container Terminal Port where India and Japan were to jointly develop the ECT.
In March, the Government of Sri Lanka had handed over a letter of intent to APSEZ for the development of the WCT. The negotiations were purely between the company and the Sri Lankan government without any involvement of the Government of India, officials insisted.
The proposed agreement, which is a 35-year build, operate and transfer (BOT) contract, is expected to be signed in November this year. Apart from Adani’s 51 percent stake, Sri Lanka’s John Keels Holding will own 34 percent. The remaining 15 percent will be owned by the Sri Lanka Ports Authority (SLPA), a state-owned company that operates ports.
With a water depth of 20m, the new terminal will have a 1,400m quay wall and a terminal area of around 64ha. The WCT’s first 600m quay length is planned to be finished for operational use within 36 months of the signing of the BOT agreement, whereas the complete quay wall is expected to be completed in 48 months.
The WCT, in comparison to the ECT, is less developed and thus will take more time to develop. Its position is also of less strategic importance than that of the ECT.
Despite giving assurances to India’s External Affairs Minister S Jaishankar, Sri Lankan’s Rajapaksa government went ahead with canceling the agreement on the ECT, which in turn strained its ties with New Delhi. In addition to that, Colombo’s decisions to give several crucial infrastructure projects, including those New Delhi considers strategically sensitive, to China, further damaged the ties.
The Gujarat-based Adani Group is known to be close to the Modi government and has been seen to have been favored for several major infrastructure projects.