Commercial and logistics hub: Scrutiny over land for Chinese firm

The agreement signed recently between the Sri Lanka Ports Authority (SLPA) and China Merchants Port Holdings to build a commercial and logistics hub in the Colombo Port has come under scrutiny as ports trade unions claim that the Government has secretly handed over the land to China without following the State-approved tender procedure.

Speaking to The Sunday Morning, Janatha Vimukthi Peramuna (JVP)-affiliated All-Ceylon General Ports Employees’ Union (ACGPEU) Deputy General Secretary G. Niroshan said that the land had been handed over to a Chinese company for a project on a Build-Operate-Transfer (BOT) basis.

“There have been concerns regarding this deal. Despite our protests, the Government went ahead as it had been planned before and handed it over to China. They have only Cabinet approval and they didn’t follow the proper tender process,” he charged.

The agreement was signed between the SLPA and China Merchants Port Holdings in Colombo to jointly build the South Asia Commercial and Logistics Hub in the Colombo Port.

It was previously reported that there was a proposal from China to establish a cargo service supply centre as a joint Public-Private Partnership (PPP) in the Battenberg area of the Colombo South Harbour.

A proposal has been submitted by the Chinese-controlled Colombo International Container Terminals (CICT) to establish a cargo service supply centre within a portion of land – 5.3 hectares (ha) in extent – adjoining the South Asia Gateway Terminals (SAGT) and surrounded by the Colombo Port City, the CICT, and the East Container Terminal (ECT).

However, the ports trade unions are opposed to the proposed project, claiming that it can cause a loss of nearly Rs. 2.8 billion annually.

They allege that the SLPA will lose control over the cargo service supply as a result of letting CICT undertake the business.

The unions allege that the Government is trying to rent out the 5.3 ha land situated at a prime location in Colombo to CICT at a monthly rent of Rs. 800,000.

Cabinet approval had been granted for the proposal submitted by then Ports and Shipping Minister Rohitha Abeygunawardena to appoint a negotiation committee and to take further actions as per the recommendations of that committee.

As reported, China Merchants Port Holdings has said that it was teaming up with Sri Lanka’s Access Engineering and Colombo Port to set up a $ 392 million logistics centre as a BOT project.

The South Asia Commercial and Logistics Hub will be a 50-year BOT project, with Colombo Port holding a 70% stake and Access Engineering and SLPA holding 15% each.

The statement said the project would “result in an infusion of $ 126 million in addition to an upfront payment of $ 26 million after the agreement is signed”.

An eight-storey building with a capacity of 530,000 cubic metres will be built in the centre of Colombo Port. Construction will begin in the second half of 2023 and is expected to be completed by the end of 2025.

It will be linked to the Bandaranaike International Airport in Katunayake via a port access elevated highway.

It will also offer several services, including multi-country consolidation, container freight station, general warehousing, and value-added services.

When contacted by The Sunday Morning, SLPA Spokesman Chitral Jayawarna said that the relevant information regarding the agreement was not available at the SLPA as it was being handled by the Ports and Shipping Ministry.

Attempts to contact the Ports and Shipping Ministry were unsuccessful.