Construction of USD 650 mn. Colombo West Container Terminal to begin next year

Joint venture between India’s Adani, JKH and SLPA

Construction of the first phase of the USD 650 million West Container Terminal (WCT) of the Colombo Port, a joint venture between India’s Adani Group (51%), John Keells Holdings (34%) and Sri Lanka Ports Authority (15%) will begin next year with the construction of a 600-metre quay slated to be operative in 24 months, JKH announced on Thursday.

The announcement said that Colombo West International Terminal (Private) Ltd. (CWIT), the project vehicle, had been incorporated to undertake this investment in which JKH will have an estimated equity commitment of about USD 70 million to be infused into CWIT on a staggered basis over the project construction period.

The Build Own and Transfer (BOT) Agreement between CWIT and SLPA to build this deep water terminal, with a quay length of 1,400 metres, an alongside depth of 20 metres and an annual handling capacity of approximately 3.2 million TEUs was signed on Thursday.

The remainder of the terminal is expected to be completed within a further period of approximately 24 months, the announcement said. There will be a 70:30 debt to equity mix for funding the project with the debt funding secured subject to the related financing documents being completed prior to project commencement, the announcement said.

JKH said in a news release signed by its Deputy Chairman/Finance Director Gihan Cooray that the development and operation of the first phase of WCT has been identified as a Strategic Development Project with the requisite Gazette being issued on July 30, 2021.Originally, the partly completed East Container Terminal of the Colombo Port was to be given to a consortium of Adani, JKH and Japanese investors on a 51-49% arrangement with SLPA holding the controlling interest. But this was strongly resisted by the port unions and some constituents of the ruling coalition.

That plan was thereafter abandoned and as a compromise, the private sector (led by the Indians) was granted development rights for the undeveloped western part of the harbour where the WCT will be built. Some resistance to this agreement, now finalized, is also being expressed by port unions.Currently the South Asia Gateway Terminal (SAGT) in which JKH has a major stake along with SLPA, APM Terminals and a subsidiary of the Evergreen Corporations is the top performer in the Colombo Port with the collective Sri Lankan interest at around 60%.

The third terminal, Colombo International Container Terminals Ltd. (CICT) is controlled by China Merchant Port Holdings which holds 85% of the company with the SLPA holding the balance 15%. This terminal with an annual capacity of three million TEUs has a 35-year BOT Agreement with SLPA.