UNP clarifies its stance on the ECT

The United National Party has refuted claims made by the government alleging that the former government had agreed to sell the Eastern Container Terminal (ECT) of the Colombo Port.

In a statement on Thursday (21), the UNP said that the 2019 Government has not entered into any agreement to sell the ECT or any section of the Colombo Port to India, Japan or any other country, adding that the agreement pertained only to the company operating the terminal.

The Memorandum of Corporation was signed between the Sri Lankan, Indian and Japanese Governments to lease out the terminal to a Terminal Operating Company.

Accordingly, a Terminal Operations Company was to be established with Sri Lanka retaining a 51% stake, while the remaining 49% stake would be distributed between a nominee company of India and a nominee company of Japan. On the 10th of September 2019 Cabinet approval was provided to proceed with the signing of the cooperation agreement between the three countries.

The Terminal Operations Company (TOC) was set up with the “exclusive and explicit purpose of providing the equipment and systems necessary for the development of the ECT and managing the ECT”.

The TOC was to be provided with a set period of time to operate the ECT, thereafter the manner of operations of the ECT was a decision of the Government of Sri Lanka. There is no mention of a sale of the ECT.

Development under two phases

The development and operations of the ECT was to be carried out over two phases. Phase “A” was to consist of the operation of the existing 600 meter quay length with the necessary terminal handling equipment. Funding for this phase was to be provided via a US $190 million loan from JICA.

Phase “B” would require a further funding of US $500 million and would result in the extension of the quay from 600 meters to 1,350 meters as well as creating new yard space. That is an additional 750 meters.

Furthermore, the Governments of Sri Lanka and Japan were undergoing negotiations to sign Exchange of Notes under highly concessionary conditions. Accordingly the loan provided by JICA would be done so at an interest rate of 0.1% for a period of 40 years, with a grace period of 12 years. Japan has continually funded the development of the Colombo Port since 1977.

The construction of phase “B” with a loan obtained by the Sri Lankan Government would ensure that ownership of the East Container Terminal would be retained. In the case of an investment in the terminal by other parties, the Government does not have exclusive ownership.

Other details were to be negotiated in accordance with clause 3 & 5 as stipulated in Memorandum of Corporation, by a Joint Working Group comprising representatives of the three Governments. None of these matters had been finalized.

The decision of the management of the TOC had to be taken jointly by the three Governments.

At the time of President Gotabaya Rajapaksa assuming office, India had not formally informed us of the company which they would nominate. It was indicated that it would be the Adani Group.

The Sri Lankan Government had the condition that the Indian partner should not operate any other port in India to the disadvantage of the Colombo Port.

This was to ensure that the Colombo Port would retain its status as the main container port for South Asia.

The agreement negotiated by the UNP while in Government was one that was beneficial and safeguarded the Colombo Port as the leading container port in South Asia.

Memorandum of Cooperation East Container Terminal 1