Largest Investment In Port Sector By Adani In Sri Lanka – Free PDF Download

What has happened?

• On September 30, 2021, the Gujarat-headquartered Adani Group signed a Build Operate Transfer (BOT) agreement with Sri Lanka’s largest listed company John Keells Holdings and the
• Sri Lanka Ports Authority (SLPA),
• To jointly develop the Colombo West International Container Terminal (CWICT) at the strategically advantaged Colombo Port, located amidst one of the busiest shipping routes in the world.
• Primarily a container port, the Colombo Port has handled over 5 million TEU of containerised cargo. It has 5 functional terminals.
• As per the 35 year-long BOT agreement inked by the three parties, the Adani Group will have majority, 51%, stakes, while John Keells would hold 34%, and the SLPA, 15%.
• The more than $700-million investment is said to be the largest foreign investment in the island nation’s port sector.
• Issuing a statement on the deal, the SLPA said, “the massive development” following the agreement, will further enhance the Colombo Port’s “global reputation as an international hub port”.

Back story

• Sri Lanka, led by different governments, has been keen to further develop its port and emerge a formidable regional hub, but roping in private foreign investor Adani directly was not Colombo’s first choice.
• In May 2019, the Maithripala Sirisena-Ranil Wickremesinghe government signed a tripartite agreement — a Memorandum of Cooperation — with the governments of India and Japan,
• To jointly develop the partially-functional East Container Terminal at the same port.
• For India, the deal meant a potential advantage, both commercially and strategically, especially next to the China-backed Colombo International Container Terminal (CICT),
• Where China Merchants Ports Holdings holds 85% stakes in a BOT agreement spanning 35 years.
• Those making a case for an Indian presence at the port argue that over 70% of the transshipment business at the Colombo Port is linked to India.

But cancelled…

• In a cabinet decision on February 1, 2021, Sri Lanka unilaterally ejected India and Japan out of the agreement, instead opting to develop the ECT with its own investment,
• Citing persisting protests by port workers unions, nationalist groups and Buddhist monks vehemently opposing any foreign role in a strategic national asset.
• The Rajapaksa administration’s move took New Delhi by shock, as there was no prior indication of Colombo reneging on the deal.
• Just a month ahead of the announcement External Affairs Minister S. Jaishankar had visited Colombo, held talks with the leadership over a gamut of bilateral issues, including development cooperation such as the ECT.
• However, the entire deal fell through soon after, much to the displeasure of both India and Japan that were quick to convey the same to the Sri Lankan leadership.
• Colombo’s cancellation of the ECT deal caused considerable diplomatic strain.

Now West container terminal deal?

• Shortly thereafter, early in March, a cabinet decision was taken to develop the West Container Terminal (WCT) at the Colombo Port along with India and Japan.
• India had “nominated” Adani Ports, the Cabinet spokesman said.
• The deal was pitched as a “compromise”.
• On March 15, Adani Group chairman Gautam Adani took to Twitter to confirm their role in developing the WCT.
• Last week, the Group signed an agreement with John Keells and SLPA to commence development work.
• Japan is yet to decide on its involvement in the WCT project.
• Whether it was the former ECT deal or the current WCT agreement, it remains unclear how the Adani Group became the chosen investor from India.
• Until now, there is no indication of a competitive bidding process or of the selection process. or the rationale used to select the investor.
• Colombo has repeatedly referred to the Adani Group as a “nominee” of the Indian government,
• Although New Delhi sought to deny it had nominated anyone for the project.

significance

• Colombo’s number 1 customer is the Indian shippers and the carriers who give connectivity to the region and the world via Colombo.
• A partner from India is, therefore, a welcome development to
• Sri Lanka to build new relationships in the maritime and logistics sector with India.
• Sri Lanka, in his view, must pursue enhanced trade relations with India to develop itself as a regional hub.
• The capacity for ultra-large container ships in the region is low. While Colombo leads in that capacity, it has not developed and upgraded its capacity enough to be in line with the demand.
• The Adani Group’s joint venture at WCT, and the SLPA’s development of ECT would, over time, make Colombo more competitive.
• The presence of multiple global players in Sri Lankan ports would also help balance different geopolitical actors and ease current tensions, he said.

Q) Which is the Deepest Port in India?

1. Kandla Port
2. Jawaharlal Nehru Port
3. Gangavaram Port
4. Mundra Port

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