East Container Terminal

The proposal to sell 49 percent of the East Container Terminal (ECT) of the Colombo Port to a group of investors led by India’s Modi-friendly Adani Group has been the hottest potato to land on our ruling coalition’s lap since its election last year. Massive trade union and other resistance, strongly supported by the Buddhist clergy and other activists, many of whom campaigned for the Sri Lanka Podu Jana Peramuna (SLPP) and its allies at the last election, continues to escalate. This opposition is backed by one of the country’s most popular television channels is enervating the ‘Save ECT’ effort. The fact that Adani is interested in the new farm laws against which unprecedented farmer protests have been mounted in India has added grist to the mill of those hellbent on preventing what they call a sell-off of a valuable national asset.

The ECT is the second deep-water facility in the Port of Colombo which began operations last November. The state-controlled Sri Lanka Ports Authority (SLPA) has been running it since inception and the government has unequivocally announced that it will hold the controlling 51 percent of any joint venture. It urges that the lion’s share of the trans-shipment business to India now handled in Colombo will benefit from the Indian involvement. Only the first phase of ECT under which a 450 m berth has been commissioned has been completed until now and an additional 600 m berth must be added in the second phase. Given the government’s current cash-strapped status, foreign investment from India and Japan, also interested in investing in this project, as well as investment from John Keells Holdings, Adani’s local partner, is most welcome.

The previous government in 2019 signed as Memorandum of Cooperation with India and Japan to develop ECT. But in the context of the present brouhaha, both Sajith Premadasa’s Samagi Jana Balavegaya (SJB) and its parent UNP, appear inclined to win whatever mileage that is possible from the resistance that has been mounted against foreign investment in ECT. The port unions say that the SLPA has the resources to develop the terminal and no foreign investment is required. They vociferously ask why profits that can be earned by a solely owned national entity should be shared with foreign investors. Different voices from sections of the ruling coalition are heard on the news channels every night and what the eventual decision will be is yet an open question. On Thursday night, former minister and Communist Party leader, DEW Gunasekera, added his voice to the cacophony saying that the government must not forget that Prime Minister SWRD Bandaranaike lost his life over a port related matter. The reference was to Buddharakkita fishing for government backing for a lucrative shipping line after Bandaranaike sent the British out of Trincomalee and nationalized the country’s ports.

The Abhayarama in Narahenpita was the virtual headquarters of the SLPP in the run-up to the presidential and parliamentary elections. So much so that it was commonly referred to as the “Mahindaramaya.” Its chief priest, Ven. Muruttetuwe Ananda who is President of the Public Service United Nurses Union, has been particularly outspoken on the ECT controversy and has not minced his words opposing foreign investment in it. Yet both the prime minister and president were at his temple recently for the priest’s landmark birthday alms giving. This has been interpreted as fealty to the Sinhala/Buddhist virtue of kelehi guna danna (acknowledging the good that somebody has done you). Many analysts believe that the president is more inclined towards permitting the 51-49 deal while the prime minister, consummate politician he is, is working towards smoothing the wrinkles on the governments support base. They say there’s no aiya-malli problem here that the government’s opponents are wishfully hoping for.

Our regular columnist Kumar David, unrepentant Marxist and electrical engineering professor, has in his contribution today offered an insightful analysis on “the right way” to do ECT which we recommend as good reading (as always) both for style and substance. He has touched on geopolitical implications that are obvious in the context of both India and China looking to maximize their influence in this region which is very much a factor in the equation. China Merchant Port Holdings (CM Port) already has a 99-year lease on the Hambantota Port given them by the previous government on the grounds that there was no other way to repay the massive Chinese loan which enabled its construction. CM Port also operates the existing deep-water terminal in Colombo, Colombo International Container Terminals. The Jaya Container Terminal, the Unity Container Terminal and South Asia Gateway Terminal run in partnership by John Keells Holdings and the global shipping giant Maersk are not able to handle the mega ships. Hence the focus on ECT.

Opponents of foreign investment in this terminal argue that Adani, the biggest operator and builder of Indian ports, will wreck ECT for India’s advantage. But the fact is that India has only one deep water port, Krishnapatnam in Tamil Nadu with a draft of 17.5 meters as opposed to Colombo’s 18 meters. Colombo has the further advantage of tidal movements affecting the depth of its ports only marginally while Indian ports must deal with the complications arising from such movements. This, together with the fact that our ports straddle East-West shipping routes gives us many advantages that will not be damaged by an Indian interest in ECT. But how the papadam will crumble remains to be seen.