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Colombo Port ECT: Confusion over Investment



By Eng. D. Godage

The Colombo Port East Container Terminal, ECT, is hot topic, being an important economic nerve centre essential to the country but getting involved as a pawn in geopolitics. Opinion by I. P. C. Mendis in The Island (27.01.2021) prompted to clarify some of the matters and expose true facts.

ECT will neither be sold nor leased; it will be developed through investment from an Indian party and others by giving out 49 per cent share to them while keeping 51 per cent share with the Ports Authority. This is the government stance. Public awareness exists on Build Operate Transfer (BOT) agreements in the port with two terminals operating under this method. Land and sea area are leased to the relevant party by a lease agreement for a specified period, 35 years in both, and the private party invests to develop the terminal. So investment is an essential part in those agreements. But presently announced terminology creates confusion.

The Colombo South Harbour would not have been a reality if not for the Asian Development Bank (ADB), which offered a major loan for infrastructure development when other major donor agencies declined to come forward. The ADB Country Lending programme had only $ 100 million in 2005 while the cost of the South Harbour project was estimated at $ 330 million. There were unfavorable loan covenants such as Jaya Container Terminal (JCT) privatization, and that became a hindrance.

In 2004, the government sought private sector funding for the breakwater works and SEMA (Strategic Enterprises Management Authority) advocated the same even after showing that there was no precedent as regards private sector investment in such port infrastructure globally. Different methodologies, like bond issues, the setting up of a Company as SPV (Special Purpose Vehicle) for commercial borrowing were talked about until May 2006 without success. Fresh negotiations thereafter with the ADB reached fruition and the critical covenants were either relaxed or diluted. The loan amount was increased to $ 300 million and the agreement thereon signed in April 2007.

Critical loan covenant was the selection of private investors for the first two new terminals chosen through open competitive bidding process followed by signing of concession agreements. Subsequent amendment to the Loan Agreement in June 2012 at the request of the Ports Authority changed ‘the first two terminals’ to mean ‘any two’. At no stage did the agreement include private participation in all three terminals.

Proposals were invited from prequalified private investors for the first terminal viz. the South Terminal from February 2007 even before signing of loan agreement to comply with loan covenant. In fact, invitation was made on two occasions as the first was cancelled in February 2008 when a total of five offers with two favourable ones were available. Compliance with the loan covenant was delayed by over a year and this led to a delay in the release of funds from ADB and commencement of construction.

The Memorandum of Cooperation signed with Japan and India in May 2019 proposed the development of the ECT under an Operations Company with 51 per cent shares retained by the Ports Authority. When the Minister submitted a Cabinet Memorandum naming one Indian investor, Adani, disregarding Japan, the government deviated from the agreement as well as the ADB loan covenant of open competitive bidding process. These deviations may be of different degree but the fact remains that they are digressions.

Another issue is that Hambantota Port and the Port City are totally different scenarios. The former is a white elephant in short even though the Chinese have acquired it. Two feasibility studies, one by SNC Lavalin of Canada and other by Ramboll of Denmark did not show viability of the project unless container operations started immediately. While both the Colombo South Harbour and the Hambantota Port projects commenced around the same time, the Hambantota project received priority. As regards the Port City, benefits may accrue after 10 years or more. On the other hand, since last October, the ECT has been operational with one berth built by the Ports Authority and is making profits.

The proposed formula for the ECT, in the referred Opinion, is a Joint Stock Co. As regards both SAGT and CICT, there are BOT (Build Operate Transfer) Agreements signed after being cleared by the highest legal authority of the country; they are between two parties, Ports Authority and the investor. They include a condition that Ports Authority hold a particular share, viz. 15 per cent. On the other hand, Joint Stock Company formation by the Ports Authority as the major shareholder seems a different process. The formation of such company is not permissible under the SLPA Act as found some time ago.

Further to the registration of an unlisted company and proposed structure, it is essential to divulge, inter alia, the total equity in order to estimate the Ports Authority share, Articles of Company to be acceptable to other private party, method of raising $ 500 million as building cost and liability on Ports Authority as lead partner.

Another subject that needs attention is the announcement by the Minister that West Terminal has to be commenced now. It has to be noted that ECT requires at least two more years to operationalize in complete form while only one berth of ECT is operational now by the Ports Authority. Another matter worth mentioning is that the Colombo Port Development Plan prepared and presented by the Ports Authority with the assistance of ADB in March 2019 states the capacity shortage starts from 2020, ECT operations start in 2019 and West Terminal commences operations in 2025. The ECT operations have been delayed and as such the WCT operation is not urgent with ample time available for planning.

What is urgently needed is a prompt decision on the ECT operations already behind schedule and the acceleration of the procurement process by the Ports Authority for remaining work and this is time-consuming.

Those in the maritime industry and others who wish for the success of Colombo Port highlighted the delay in operationalisation of ECT. Trade Unions are agitating, politicians are talking but no productive action has been taken. In the end, a prompt decision is essential as terminals cannot be built overnight but that task takes about two years. Otherwise, the Colombo Port will face congestion, ship diversions and bypassing and above all losing global reputation and position.

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Regulate sports in popular schools ahead of big matches



The Big Matches between popular schools in Colombo and main outstation cities are round the corner. In the past school sports was in the hands of former sportsmen and sportswomen who loved the game as well as their school. They devoted their time and money to coach the budding youth without any monetary gain for themselves.

But, see what has happened today. Sports coaches selected by the schools demand millions of rupees to coach the students. And this is readily agreed and paid by the school authorities. In the good old days the members of School teams were provided free meals during match days and also Sports equipment. But it is not so now. The school earn millions of rupees from big matches played for a duration of two, or three days in some cases, and this money could be utilised to buy the required cricket gear such as bats, pads gloves, boots, etc,. I understand a pair of cricket boots is in the region of Rs.18,000 to 25,000. Can a poor village lad who is enrolled to an affluent schools in Colombo, based on his performance in Education and Cricket afford this? These lads should be given all the support to continue in their respective sports rather than drop out due to financial constraints

Coaches in some schools are in the payroll of big-time businessmen whose children are, in the so called pools. Parents of children engaged in a particular sport should not be permitted to come in as sponsors as this would be rather unethical.

The Big Matches between popular boys schools are around the corner and I suggest that the Sports Ministry ensures performance based selections rather than on other criteria.




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‘Post turtle’ revisited




I have written about this amusingly thought-provoking creature, the ‘post turtle’ to ‘The Island’ around three years ago (appeared in the opinion column of The Island newspaper on the 19th of June 2018, titled ‘The post turtle era’). The story, which I am sure most of you have heard/read already, is obviously not a creation of mine and I happened to come across it somewhere, sometime ago. 

And for the benefit of those, who haven’t heard the story, it goes like this:

“While surturing a cut on the hand of an old Texas rancher, the doctor struck up a conversation with the old man. Eventually, the topic got around to politics and then they discussed some new guy, who was far too big for his shoes, as a politician.

The old rancher said, ‘Well, ya know he is a post turtle’. Not being familiar with the term, the doctor asked him what a ‘post turtle was’.

The old rancher said, ‘When you are driving down a country road and you come across a fence post with a turtle balanced on top, well, that’s your ‘post turtle’.

The rancher saw a puzzled look on the doctor’s face, so he went on to explain. ‘You know, he didn’t get up there by himself, he doesn’t belong up there, he doesn’t know what to do while he is up there, and you just wonder what kind of a dumb ass put him up there in the first place’.”

Now I was having this nice, little siesta, the other day and suddenly there appeared ‘the turtle’ in front of me, sitting on a fence post, seemingly doing a precarious balancing act as the post itself was too high for it to give it a try to jump down to the ground. Not that it probably wanted to do it anyway for it looked quite contended and happy sitting there doing absolutely nothing. And no doubt some loyal and dumb all rolled into one, must have put him up there and been feeding it well too, for it looked quite contended and fat showing a thick head that kept turning to the left and then to the right, while its tongue kept on lolling out as if it was saying something, which must have been absolute gibberish and rubbish anyway.

What a fitting and symbolic representation, 

I mean this ‘post turtle’, of the lot, or the majority of it sitting across ‘the oya’, I mused on after I woke up from my snooze.

Many of them get there thanks to the gullible voter, who while ticking the boxes, thinks: he/she will surely deliver the goods this time as promised! 

And those two-legged post turtles inside the edifice, bordering the Diyawanna, like the one in the story, keep uttering sheer rubbish and spitting out incomprehensible mumbo jumbo, all in return with thanks to those, who tick the boxes in their favour.

Their statements such as ‘what is oxygen for, to eat?’, is just one among many such stupendously stupid utterances of theirs and I don’t want to tire you with the rest, for they are well known and far too many.

Now I have only one question for you before I end this:

When are we going stop being ‘those dumb asses’, once and for all?

Laksiri  Warnakula  

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Abuse of use of title Professor



I read with much interest the letter by Mr. Nissanka Warakaulle, regarding the above matter, in the issue of the Sunday Island of 18th April 2021. I agree fully with the contents of his letter. He should be very familiar with the regulations as he is a former Registrar of the University of Colombo. I wish to highlight another instance where it is abused. In the 1970s, the title of Associate Professor was created. Until then there were only three categories of Professors. Firstly the holder of the Chair, secondly a co-Professor and thirdly, an Emeritus Professor. There were also, Lecturers, Senior Lecturers and Readers. The title of Reader was replaced with the title Associate Professor, which is meant to be a designation, to be used after the name. However, this category of academics started using it as a pre-fix, dropping the word Associate!

Profesor Sanath P. Lamabadusuriya MBE
Emeritus Professor of Paediatrics,
University of Colombo

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