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NJC says MoC signed by previous govt on ECT not binding, calls for its cancellation

The National Joint Committee (NJC) has urged the government not to lease the East Container Terminal (ECT) to India or any other country. The NJC, in a statement issued yesterday (29) warned the project would jeopardize national security, independence and political-economic sovereignty.

The NJC said that despicable practice of alienating strategic national assets could not be adopted by the incumbent administration because Gotabaya Rajapaksa and his Government were elected on an over-whelming patriotic mandate to protect our strategic assets.

The NJC drew the attention of the President, PM, the Cabinet of Ministers and also the parliamentarians, to the following facts, evolutions and risks associated with this proposal to lease a share of ECT:

1. Sri Lanka cannot afford to become victim of international political power struggle among global and regional powers. Having already allowed China to occupy Hambantota Port, and India to occupy Trincomalee Oil Tanks, the country should not make the mistake of allowing India, any other nation or private party to occupy ECT.

2.The ECT being the deep draft terminal the SLPA has and should be kept under full control and management of the SLPA, as also recommended by the Expert Committee appointed to study the development of ECT. Any alienation of the ECT would lead to devastating repercussions on SLPA in terms of losing control of modern shipping business and foregoing revenues.

3.We learn that the SLPA has capital funds voted for the purpose of gradual development of the ECT by itself, and that it has few hundreds of millions of dollars in reserves.

Besides, the ECT could be operated as it is even now, and earn nearly 50 million dollars annually enabling SLPA to further develop ECT on a stage-by-stage basis using its own resources that would be earned through terminal operations. Therefore, the claim that the SLPA does not have resources to develop the ECT by itself is not only incorrect, but also misleading the public.

4.While we are confident that the ECT could be gradually developed by the SLPA while operating it, the NJC is of the opinion that the Government’s apparent move to negotiate with a single foreign firm is against the national interest and is violating transparent procurement principles, even if one presumes that private local or foreign resource mobilization is necessary. If such external investment is needed, the Government with the utmost responsibility of upholding the citizen’s rights should have called for competitive bids from among potential investors, preferably from local private sector companies first and internationally thereafter.

5.Firstly, the MOC dated 28th May 2019 is not a binding agreement but an arrangement to negotiate. In the opening paragraph of the MOC, the three parties confirm their “commitment to cooperate”. The Paragraph 2 of the MOC states that GOSL invites “Japanese participants concerned, and Indian participants concerned to take 49% stake collectively in the ‘Terminal Operations Company’ (TOC) that will be setup”. Thus the offer is made by Sri Lanka for India and Japan to “collectively take 49%” and not for any party to take the whole of 49% by itself. Unless a fresh offer is made by Sri Lanka to India to take 49% stake by itself, the latter cannot accept the offer made by the previous Government to both India and Japan collectively in as much as Japan has now withdrawn from the MOC.

6.Therefore, it is not correct to state that the Government is obliged to consider the commitments made to India previously.Sri Lanka is not obliged by this agreement to make a fresh offer to India for the whole 49% stake in the TOC, and therefore there is no legal obligation to proceed with the earlier offer made. In any event the offer has now lapsed as India cannot possibly now collectively take 49% with Japan in view of Japan’s withdrawal.

7.In paragraph 5 of the MOC it is stated that the three governments “will hold a joint working group meeting among authorities concerned from the three countries in a timely manner to discuss issues”. This statement itself demonstrates that there is no binding contract entered between Sri Lanka on the one hand and India and Japan on the other as it is only an agreement to discuss. In any event the agreement is for the three Governments to discuss and not for two Governments to discuss. It is interesting to note that in clause 5(iv) the parties had agreed to discuss “modification of this memorandum”. Justice Weeramantry, former judge of the Supreme Court of Sri Lanka, in his “Treaties on the Law of Contract prevailing in Ceylon”, states: “so long as the parties are in negotiation either party may retract”.

Therefore, the Government’s reluctance to drop the idea of alienating the South Port of Colombo is not justified. One wonders whether the provisions relating to the National Procurement Commission was removed from the Constitution of Sri Lanka to plunder the resources of this nation whilst making empty declarations to safeguard national interest prior to the election. On or about 22.10.2020 the Minister of Ports and Shipping Rohitha Abeygunawardena has submitted a Cabinet Memorandum disclosing the involvement of another investor by the name of ADANI Ports and Logistics Group. It appears that the government intends awarding the contract to this group.

The question is whether Sri Lanka could, without calling for tenders, part with the ECT to the ADANI Group when the ADANI Group was not a party to the MOC entered into by the previous government. This Cabinet Memorandum itself demonstrate that giving any part of the Colombo South Port to the ADANI Group is in itself a violation of the MOC in as much as there is nothing in the MOC which permits a partner government to abdicate its rights and interests under the MOC to a third party. Article 28(d) of the Constitution of Sri Lanka states that it is the duty of every person in Sri Lanka to preserve and protect public property. Both the Minister of Port and Shipping and the Chairman of the Ports Authority, Rohitha Abeygunawardane and Lt. Gen. Daya Rathnayake, would be violating the Constitution if the property entrusted to them is alienated without getting the best price after competitive bidding. This would be a fraud that might attract criminal prosecution if not by their own government by a future government.

8.Surprisingly, there is no information made known to the public, the true owners of this strategic asset, as to the basis of selection of this single party for negotiations. Besides, the selected company with which the Government appears to be contemplating to negotiate is a direct competitor of Sri Lanka’s ports, and such an investor cannot be reasonably expected to make managerial decisions for the betterment of Colombo Port. It may be pertinent to note in this regard that the said firm is currently developing several competing ports in the South Asian region, it would be unwise to invite such a firm to take control of our strategic Port terminal, where a deliberate action to run down our Port cannot be excluded.

9.Besides, the NJC learns that the said firm has been accused of many anti-social and anti-environmental practices both in India and Australia, and no socially prudent activity could be expected from such a managing partner, leading to serious risks pertaining to social economic and political ill effects on Sri Lanka.

10.If an Indian firm occupies Colombo Port, the possibility of Indian labour being imported to operate the ECT will become significant, imposing threat to employee welfare both at Port and generally in the local economy. This would also pave the way for infamous ETCA attempted by the previous regime, and not proceeded because of the public and professional pressure. It is with dismay that we recall the protest against such moves launched by the then opposition politicians who appear to have forgotten all that now being in the Government.

11.After this government came into power, they seem to proceed with the project on the basis that they are obliged to respect the previous agreement entered into with other governments and was attempting to justify the alienation of the Colombo South Port without calling for tenders.

12.Ironically this matter has drawn public attention at a time when, the chapter dealing with the National Procurement Commission had been removed with the 20th Amendment.

13.The question that most people raise today is whether the Government’s justification was correct and whether Sri Lanka could withdraw or not proceed with the MOC, Sri Lanka entered into with India and Japan. Subsequently Japan withdrew from this MOC. The question is, in the absence of Japan, whether there is a live and valid agreement between the Governments of India and Sri Lanka that could be enforced.

14.Is the GoSL aware that Adani has been booked by the Central Bureau of Investigation in India for causing loss to Indian treasury as a result of being allowed to bid for airport contracts without experience? Adani Group has been fined by Australia for misinterpreting environmental approval conditions in mining operations. Back home in India, Indian farmers are on the road protesting against Adani Group exploiting them. There is a “Stop Adani Movement” formed in Sydney Australia. Australia’s Future Fund was forced to divest its holdings in “Adani Ports” due its corrupt connections with Myanmar’s Military and Adani’s role in the Carmichael mine project.

15.Adani has a stated objective that it is setting up deep water ports to take away the transshipment cargo business model of Colombo Port. Adani is building just adjacent to Colombo Port “The Vizhinjam Port in Kerala” with 6.2 million TEU capacity and an investment in excess of US$10 bn and other deep water ports all over India and even in places like Andaman Nicobar Island with the stated objective of transferring the Indian Transshipment Cargo business of Colombo Port to these ports. It is common sense that a company making such huge capital investments in its motherland will invest in the Colombo Port in order to try to kill its transshipment cargo business model in the long term.

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