Bangladesh’s Summit misses out on Colombo port contract as Lanka bars foreign parties

Sri Lankan President Maithripala Sirisena told the Sri Lanka Ports Authority (SLPA) workers’ unions here on Tuesday, that he would not “under any circumstances” allow the contract on Colombo port’s east terminal to be given to a foreign party.

Among the companies bidding for the project to complete the terminal on a build, operate and transfer basis, were two Indian firms, Shapoorji and Container Corporation of India, and Bangladesh’s Summit Shipping, which had a good chance of winning the deal.

In the early stages, the Sirisena-Wickremesinghe government was keen on giving the contract to a South Asian company to balance China and “the region” meaning South Asia, in the port projects.

The then minister of ports, Arjuna Ranatunga, even named the Indian firms, Shapoorji Pallonji and the Container Corporation of India, as the likely recipients of the contract.

In the master plan of Colombo Port Expansion Project, the east container terminal has a 1,200m long quay wall, alongside the water depth of 18m and a yard capacity of 2.4 million TEUs.

In May 2015, the SLPA had completed, at a cost of $80 million, a 440m single berth as the first phase of the plan to meet the shortfall in the capacity of container handling in the port of Colombo.

Chances of the expansion project going to an Indian party receded when the   government suddenly said it needed to rewrite the tender conditions. Presumably, the government was under pressure from port trade unions and nationalists within the government who were against an Indian involvement.

The president’s decision on the Colombo terminal followed the port unions’ objections to the recently finalised deal on the Hambantota port with the Chinese company CMPort, and their threat to go on strike over it.

Sirisena met the port unions and told them that he had put a clause in the agreement with CMPort which said that terms could be changed by mutual consent anytime. On the Colombo east terminal, he categorically stated that he will not give it to a foreign party.

India was keen on getting the terminal contract, having opted out of the Hambantota port contract earlier when it was offered to it by the then President Mahinda Rajapaksa. 

The SLPA invited expressions of interest for the east container terminal in June 2016, according to The Sunday Times. It learned that five consortia had applied.

The first was Aitken Spence with Port of Singapore Authority and Shapoorji Pallonji, which is an Indian business conglomerate. The second was China Merchant Holdings International (CMHI) with Evergreen, CMA CGM (shipping company) and Summit Shipping from Bangladesh.
 

The third was John Keells with APM Terminals, Maersk Lines and Container Corporation of India.

The fourth was Terminal Link (of which 49 percent is owned by CMHI) with CMA CGM. The fifth was Hayleys with Westport Shipping Services (of which 25 percent is owned by Hutchison Ports), Mitsui, Mitsubishi and NYK.