Political posturing at its peak…: Backtracking and Implementation of the East Container Terminal
By Sulochana Ramiah Mohan
Globalisation is a norm accepted worldwide but geopolitics has been seen as a curse but none realises they both go hand in hand. It’s the politics (both internal and external) that is within geopolitics than can be topsy-turvy for countries and Sri Lanka is not spared, and so is in total disarray over this term geopolitics.
Controversies are surrounding the US’ Millennium Challenge Cooperation (MCC), the light rail project and query the Japanese have, the Indian projects and demands and lately the massive USD 650 million-plus project - the East Container Terminal (ECT) a Tripartite Agreement between Sri Lanka India and Japan that is in jeopardy. There were other bitter pills too like the Hambantota Port and the Port City given to China Sri Lanka had to swallow and this could be called Sri Lanka’s strategic dilemma and this would continue.
The ECT, Memorandum of Cooperation (MoC), a tripartite joint venture between Sri Lanka, India and Japan that was signed last year on 28 May 2019. Nevertheless, some 25 Trade unions big and small and all the employees SLPA staged a massive strike on Thursday that ended on Friday morning following the discussion held with Prime Minister Mahinda Rajapaksa who assured that the matter would be studied and a new Cabinet decision would be taken on the matter. He also ordered those three small cranes ’unfit’ for ECT to be placed in the ECT till a further decision is taken. The protestors praised the Premier on his decision and kissed each other over the victory.
The ECT protest
One among many people fighting to keep the ECT 100% local is Chandrasiri Mahagamage; General Secretary of All Ceylon General Ports Employees Union who filed a case against it at the Supreme Court and the next hearing is on 18 October 2020. He said former SLPA Chairman assured nothing would be finalised without informing them. “He told us nothing has been finalised and only a memorandum of understanding has been signed.” He added why we should share the country’s asset with others. He said until the SC final verdict is issued no one should proceed with the agreement on the ECT.
While the protesters were climbing on those new three cranes on Friday, there were ships in the Sri Lankan waters waiting to enter the port. They were stranded in the sea.
The protesters’ main call is not to sell a valuable terminal like the ECT to outsiders and the SLPA can run it 100% with no shares given to India and Japan. They said that the Colombo International Container Terminals (CICT) was showered to the Chinese given 85% stake and 15% reap for the SLPA was too expensive and that should not be repeated.
They also pointed out that despite SLPA has 51% stake of the ECT, there are other locals like the John Keells will have its stakes and the revenue for SLPA would be some 15. The protesters said the rails for the new cranes were already fixed and only have to slip the cranes to ETC.
Also, the three cranes that were imported from China that had arrived on 20 June, the protesters urged the authorities to use it for the ECT whereas that was purchased for the expansion project of the Jaya Container Terminal (JCT) another small berth named JCT 5 that does not exist.
Co-convener of Trade Union Collective to Protect Colombo Harbour East Terminal, Sanjaya Kumara Weligama said that the idea of India coming into play comes from Indian Prime Minister, who is highly funded in his political career by Adani Group, a shipping company. So inevitably when the Kerala 18m deep water seaport Vizhinjam also handled by Adani is ready, they will finally divert all its cargo coming in to SL to Kerala.
He also pointed out that giving away such deepwater port when the future would be with bigger ships handling cargo, Sri Lanka will lose massive revenue.
Weligama noted that it was recently that a Committee decided that the cranes that were purchased for the JCT was directed to be used for ECT and now they are backtracking. “We need to start work quickly as already we are paying demurrage some
Rs 101 million per day from 22 June for the agent who purchased those cranes for SLPA. The groundwork for the ECT has been already completed using SLPA funds USD 25.5 million he noted.
He recalled that the Asian Development Bank in already highlighted in 2009 that the ECT venture should be run 100% by the SLPA.
Lamenting that they have been protesting about the ECT since the discussions came up, he added that why did they not cancel the cranes as there are already four cranes for JCT.
The protesters were in doubt that the Japanese will walk out from the Tripartite Agreement on the ECT as Japan has been fussing over the loans government has taken from China, hence they speculated the ECT would be handled only by the Indians and they are pressuring the Government over Chinese influence in the country. The CICT is adjacent to the ECT and both have 18m deep water berth, both would be competitive and perhaps India will direct all its cargo to come to the ECT. Nearly 45% of Indian cargo is entering the CICT currently.
When those cranes were tried to be moved for ECT, it violated the MoC between India and Japan at the same time. They have informed the authorities before the ECT berth is ready why to get these small cranes for ECT being forced on. According to the clauses of the MoC they would need bigger cranes that could carry 28 containers sidewise and also questioned that the MoC is yet to be finalised and why the cranes are forced in. They have also pointed out that these cranes are unfit for ECT.
Sri Lanka is a sought after Sovereign State in the Indian Ocean and the doors of the globalisation were opened since the war had come to an end. The race was too competitive and we must admit that the Chinese won many of those ‘races’ despite others who dished out lots of memorable services for Sri Lanka during the war, had only tagged along. It was not Sri Lanka’s fault because Sri Lanka is still in dire straight to meet ends with its trebled international debts some USD 57 billion as of now and we want international players for development without any doubts.
Only the rare country can keep itself fully isolated from the economic activities of other countries and many countries have seen astonishing economic growth in the recent past due to their willingness to open their borders and markets to foreign investment and trade which could be categorised as globalisation.
Countries like the USA, India, Greece, UK, Singapore, Hong Kong, Middle East nations, Caribbean, Latin America, many African ports, European countries, Malaysia, Philippines have ports run by foreign countries. They also collaborate with shipping lines, port operators, private companies, banks etc., are investors, and some are listed companies in stock markets.
In this background, Sri Lanka has this rooted sentiments and nationalism overpowering globalisation. There is also a concept that Sri Lanka will not be caught up with any power games in the Indian Ocean as said by the President Gotabaya Rajapaksa when he was sworn in as the President last year. He said we will be neutral. Yet we will have to accept some hard facts when accepting international players to balance the economy. How will that happen?
The ECT was identified as part of the Port expansion mission to cater to the increasing demand for service in the international shipping industry. The Sri Lanka Ports Authority (SLPA) website quotes that the Colombo Port Expansion Project is situated west to the existing port of Colombo comprising an area of approximately 600 hectares. The new harbour has three terminals each having 1,200m length and facilities to accommodate three berths alongside.
The shipping line experts say that the ECT shared with India and Japan would reap benefits ideally, regionally and internationally. India is the most important partner for Sri Lanka for shipping and logistics as we depend nearly 80% our transhipment throughput of Indian shippers both exports and imports. In addition, if we have an Indian partner they will automatically market Colombo and ensure Port of Colombo will continue to get a fair share of transhipment.
With Japan, on the other hand, it is another major maritime nation which is among the first eight global operators and they have massive market share and a large number of vessels, so they would be committed for the expansion of their business in Colombo and make it one of their regional hubs.
The partnership will lead to transparency, less corruption and will improve technology, productivity, and better competitiveness in port with other Public and Private Partnership (PPP) terminals in Colombo.
Such investment of global partnerships will increase confidence in Sri Lanka for Foreign direct investment and it will also pave the way to increase logistics-related businesses of Japan and India to invest in Sri Lanka. In addition, it will ensure less geopolitical tension as the world will see that Sri Lanka open its doors for China and other western and regional partners.
Vizhinjam port in Kerala should worry SL
The shipping companies too will see Colombo as a hub with such investments and increase vessel calls in the port and increase overall business. What not should be forgotten is that when the ECT will also offer the very same demand the CICT enjoys and if the Indian’s are barred from the project. There is a big Vizhinjam Port in Kerala that is nearing completion. When ready will be the first deepwater terminal that can accommodate 18m depth which no other terminal In India presently offers and this too should worry Sri Lanka.
Sri Lanka needs to balance its role and there would be more disputes if it fails to understand the importance of the global community and every move it take it has to be more friendly by nature and that positive vibe is what we need to attract international markets. If it is tarnished by political upheaval domestically, this message would spread fast, and rectifying it, would be a tough ask. Already the World Bank has now downgraded Sri Lanka to a lower-middle-income country exactly a year after upgrading to an upper-middle-income country aligned with Algeria and Sudan which is startling and there’s lots on the plate for Sri Lanka to do using the demands being positioned in the strategic location.
ECT needs are Super Post Panamax cranes – Indian expert
Capt. Swarup S. Bangara Independent Maritime Consultant -Sri Lanka, India, Bangladesh, East Africa, Seychelles -
Captain Bangara said that the ECT Project was proposed as a Commercial Venture, with the participation of Foreign Private entities working jointly with a Sri Lankan Entity. This was subsequently amended into an Inter Governmental Tripartite Agreement involving Sri Lanka, India, and Japan with the ‘possible’ understanding that their individual nominees would jointly operate the ECT Terminal. Basis this, a MoC was signed on which dialogue is in process.
Fail to understand reasons why there is now a rethink on this, at this stage – as practically, it makes sense to have another Entity operating within SLPA offering similar facilities to what CICT Terminal presently offers.
The ECT would only enhance the capacity of SLPA to handle more Large Container Mainline vessels.
If there now exists a feeling that SLPA can or should handle this entire project, then wonder why this whole Agreement was initiated and signed in the first place.
Can the Sri Lankan Government or SLPA have the resources to invest so much into this project at a time when the country is facing mounting external debt situation? As you are aware, discussions between Sri Lanka and India are on, regarding Sri Lanka’s request for rescheduling its debt repayment to India (About USD 960 million) and also for Currency Swap facilities under Bilateral Arrangements. I understand discussions are in progress and a decision is awaited on finalising the dates for virtual dialogue.
Needless to add that Covid-19 has affected the bottom line of most Ship operators, and the persisting low demand is resulting in high levels of Capacity withdrawals. The World Trade is projected to reach ’negative‘ 11.9 % in 2020, which will impact Shipping Lines, who are already adjusting their sailing schedules accordingly. Hence, it is all the more surprising that there is now mounting pressure on SLPA to go it alone on this massive USD 650 million plus project with such uncertainties looming large on the horizon.
What ECT needs are Super Post Panamax cranes, which can handle containers stowed 28 rows across. Usually a Terminal like CICT or ECT would require about 12 cranes to load and discharge the largest Container vessels that are presently operating globally. The question is whether the cranes that have arrived in Colombo, meet these requirements.
The CICT is the only terminal (Out of the three Terminals - JCT, SAGT, and CICT) at this point of time that has the capacity to handle the Largest Container vessels servicing these routes. Hence, in my personal opinion, it would be prudent for Sri Lanka and SLPA to introduce another Terminal with International connections to balance issues in the long run and also enhance the facilities being offered - which has been the USP for Colombo putting it in par with other Competition Transhipment Hubs.
Considering that 60 to 70 per cent of the Transhipments handled by SLPA are of Indian Origin or destined for Indian ports, which are effectively serviced by Feeders operating into/from Colombo. Hence it does make sense for India to participate in this project jointly with Japan - who has had their presence in Sri Lanka for decades.
When inquired about the Indian High Commission the ECT and implementation, whether India has raised its concerns, the response was thus:
Responding to a Media query on India-Sri Lanka discussions regarding financial matters, spokesperson of the High Commission of India said, in context of the situation concerning Sri Lankan economy’s external sector; the two countries have been engaged in close and constructive discussions on rescheduling Sri Lanka’s repayment to India, and on currency swap under bilateral and SAARC arrangements.
The matter had been taken up at the leadership level and has been followed up by senior functionaries bilaterally. Most recently, the High Commissioner of India to Sri Lanka held discussions at senior levels in Colombo on 29 & 30 June, on moving forward in the ongoing official discussions regarding Sri Lanka’s requirements. In the post-COVID world, India remains committed to partner Sri Lanka closely for the latter’s sustained economic recovery and shared prosperity.
When was asked the Japanese Embassy about the progress on the ECT and information on the MoC, the response was thus:
Regrettably tell you that we are unable to share any governmental documents with external parties. Japan believes that the development and operation of the ECT of the Colombo South Port is indispensable for the development of Sri Lanka as a hub of the Indian Ocean. The Governments of the three countries - Japan, India and Sri Lanka – concluded the Memorandum of Cooperation (MoC) on the development and operation of the ECT in May 2019, based on which Japan is prepared to contribute to the earliest realisation of the development and operation of the ECT through the tripartite cooperation. The details of the cooperation are under consultation among the Governments of Japan, India and Sri Lanka, and are yet to be finalised.