Adani Group Finalises 35-Year Deal To Build And Operate Colombo Port's West Container Terminal

by Swarajya Staff - Sep 30, 2021 05:30 AM
Adani Group Finalises 35-Year Deal To Build And Operate Colombo Port's West Container TerminalColombo Port (Pic Via wikipedia)

India's infrastructure behemoth Adani Group will sign a build-operate-transfer (BOT) agreement with its local partner John Keells Holdings PLC and the Sri Lanka Port Authority (SLPA) on Thursday (30 September), to jointly develop its West Container Terminal (WCT) in Colombo.

Colombo Port is particularly significant for India, as it handles roughly 40 percent of transshipped container cargo bound for the Indian market.

In March this year, Adani Ports and Special Economic Zones Ltd. (APSEZ) , a subsidiary of Adani Group, received a Letter of Intent (LOI) from the Ministry of Ports and Shipping of Sri Lanka and the Sri Lanka Ports Authority, for the development and operations of West Container Terminal (WCT) in Colombo, Sri Lanka.

APSEZ will partner with John Keells Holdings PLC, Sri Lanka’s largest diversified conglomerate, and with the Sri Lanka Ports Authority (SLPA) as a part of the consortium to execute the project. While Adani group (via APSEZ )will own majority stake of 51 per cent in the terminal, local partners John Keels Holding PLC will hold 34 per cent while the Sri Lanka Ports Authority (SLPA) will have the balance 15 per cent equity.

The WCT will be developed on a Build, Operate and Transfer basis for a period of 35 years as a public-private partnership. WCT will have a quay length of 1400 meters and alongside depth of 20 meters, thereby making it a prime transhipment cargo destination to handle Ultra Large Container Carriers.

Adani group will begin construction in December on a 3.5 million 20-feet foot equivalent units (TEUs) capacity terminal with an estimated investment of over Rs 5,000 crore at Colombo port.

The project is expected to boost WCT’s container handling capacity and further consolidate Sri Lanka’s locational advantage as one of the world’s top strategic nodes along the busiest global transhipment route. The Colombo Port is already the most preferred regional hub for transhipment of Indian containers and mainline ship operators with 45% of Colombo’s transhipment volumes either originating from or destined to an Adani port terminal in India.

Earlier in Aug ,the Sri Lankan government notified that the terminal will be entitled to a 25-year tax holiday under its Strategic Development Projects Act. The tax holiday will start from the earlier of the first year of profits or two years after starting commercial operations.

This will Adani group's second international project after Myanmar.

Adani group currently operates a string of seven container terminals across its 12 ports that Adani operates along the Indian coastline handling an annual volume of over 6 million TEUs.

Another terminal, Colombo International Container Terminal (CICT), is controlled by Chinese with Chinese firms holding 85 per cent of the stakes.

Colombo Port has emerged as a strategic battleground for India and China.

In 2011, a consortium led by the state-owned enterprise (SOE) China Merchants Port Holdings Company signed a 35-year build, operate and transfer agreement to develop the deep water South Container Terminal, later called the Colombo International Container Terminal (CICT), at Colombo Port.

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