- Sri Lanka likely to get US$500-800 mn soft loan from Japan
- Agreement for terminal operating company to be finalised within next three months
By Nishel Fernando
The East Container Terminal (ECT) is to be operational by second half of next year under the proposed terminal operating company (TOC) that will be jointly formed by Sri Lanka Ports Authority (SLPA), Japan and India in which SLPA would have 51 percent stake, SLPA Chairman Kavan Ratnayaka told Mirror Business.
The SLPA officials estimate that the first phase of the ECT, which has the capacity of handling 0.81million twenty-foot equivalent units (TEUs) would be operational by September –October next year.
“We have already constructed 600 metres quay wall, and the 450 metre quay wall is ready to accommodate of vessels. In addition, the backyard and gate complex is also ready,” a SLPA official said.
Sri Lanka, India and Japan recently signed a Memorandum of Cooperation (MoC) for the development of the ECT.
According to the MOC, SLPA would retain 100 percent ownership of the ECT and a TOC will be formed between SLPA and nominated partners from Japan and India, in which SLPA would hold 51 percent stake.
Ratnayaka noted that Japan is likely to hold majority shares of the remaining 49 stake in the TOC and Japan is likely to provide a US$500-800 million soft loan.
Japan has agreed to provide a concessionary loan at 0.1 percent interest with a 10-year grace period and 40-year tenure.
Ratnayaka stressed that the government secured the best possible deal for the stalled ECT to finally go into operation, while significantly reducing the government’s financial burden.
He pointed out that earlier SLPA had to borrow at an interest rate of 2.5 percent to develop the Jaya Container Terminal (JCT).
The loan would also be utilised to re-pay earlier loans obtained by SLPA for port development activities, which includes loans obtained for JCT and the US$80 million loan for the construction of first phase of ECT.
Ratnayaka further emphasised that over 70 percent of the transhipment volumes of ECT would be linked to India, hence, he said the agreement would ensure the continuation of these transhipment volumes to the ECT.
The SLPA plans to finalise the agreement for the proposed TOC with Japan and India, in three months.
However, Ratnayaka said that the Joint Working Group is yet to be appointed to hold negations of terms of the proposed TOC.
The Working Group is expected to be appointed once the Minister of Ports & Shipping and Southern Development, Sagala Ratnayaka returns from Germany.
According to the SLPA official, once the TOC is formed, it will procure the quay cranes and other yard machinery needed to equip the terminal, which would be at an estimated cost of US$100 million
The Ministry of Ports & Shipping and Southern Development estimated that it would take around one-year for the procurement and installation of these equipment.
The proposed TOC would also commence the construction of second phase of ECT, which would require an investment of around US$400 million.
Once completed, the ECT would have a capacity similar to the Colombo International Container Terminal (CICT), which is operated by China Merchants Port, with a 2.4 million TEUs with 1200 quay wall.
Ratnayaka further said SLPA would move ahead with West Container Terminal development with a partner, once the ECT begins operations.