The Sri Lanka Port Workers’ Union General Secretary Niroshan Gorakahenna told the media that the workers are opposed to handing over the port to the Adanis and asserted that the Sri Lanka Ports Authority (SLPA) itself should undertake to build the WCT.
‘It can do the ECT, it should be able to do the WCT too,’ he said and added: ‘ Sri Lankan nationalists cannot oppose foreign involvement in the East Container Terminal and allow it in West Teminal. Workers will oppose it. We plan to talk about this to the Chairman of the SLPA on Monday,’ Gorakahenna is quoted in Virakesari as saying.
On Friday India had denied Sri Lanka’s announcement that New Delhi had cleared the proposal of an Adani group company to develop the West Container Terminal (WCT) at Colombo port. The Telegraph online said
‘Our high commission in Colombo has already conveyed to the government of Sri Lanka that their media release in so far as the reference to the approval of the High Commission was concerned, is factually incorrect. We understand that the government of Sri Lanka has engaged directly with investors on this project,’ external affairs ministry spokesperson Anurag Srivastava said.
This is the first time the ministry has commented officially on the Lankan government’s announcement.
‘Cabinet approval has been granted on 01-02-21 to develop the West Container Terminal of Colombo South Port as a private–public limited company in collaboration with the Sri Lanka Ports Authority and parties nominated by Indian and Japanese government,’ the Lankan announcement on Tuesday had said.
It added that the proposal presented by Adani Ports and Special Economic Zone Limited (APSEZ Consortium) had been approved by the Indian High Commission.
Asked on Friday if India had got the formal offer for participation in the project, spokesperson Srivastava did not give a specific answer.
He said: ‘Our High Commission in Colombo has already conveyed to the government of Sri Lanka that their media release in so far as the reference to the approval of the High Commission was concerned, is factually incorrect. We understand that the government of Sri Lanka has engaged directly with investors on this project.’
Adanis On A Roll In India
Meanwhile, the Adanis are on a roll in India. P.Manoj of Hindu Business Line reported from Mumbai as follows:
With three big acquisitions having a combined value of INR 146590 million in five months, the Gautam Adani-led Adani Ports and Special Economic Zone Ltd (APSEZ) is on a roll. On March 3, APSEZ acquired a 31.5% stake in Gangavaram Port Ltd (GPL) from a unit of private equity firm Warburg Pincus LLC for INR 19540 million and said it was in talks with D V S Raju and family, the promoters of the port located in Visakhapatnam, for buying their 58.1% stake in GPL.
APSEZ’s second big acquisition in Andhra Pradesh, India’s second biggest maritime state by cargo volumes handled, after picking up a 75% stake in Krishnapatnam Port Co Ltd (KPCL) for an enterprise value of INR 120000 million on October 5.
On February 16, APSEZ said it has completed the acquisition of Dighi Port Ltd, located close to state-owned Jawaharlal Nehru Port Trust (JNPT), for INR 7050 million under India’s bankruptcy law.
A consortium led by Adani Ports and Special Economic Zone Ltd (APSEZ) will soon announce a deal to develop the West Container Terminal (WCT) at Colombo Port with an investment of over $1 billion under a government-to-government agreement.
The three Indian acquisitions expand APSEZ’s market share to 30 per cent on a pan-India basis, a level many believe will not make it a monopoly, adversely impacting competition. This is because the 12 major ports owned by the Centre controls more than half of the country’s ports traffic.
Yet, many smaller, single terminal operators are frightened at the scale at which APSEZ is expanding. ‘I told my promoter let us pack up and leave’, said the CEO of a company operating a single berth at a port on the eastern coast.
Industry sources said that only Adani has the money and the appetite to buy ports and terminals. ‘Because of its demonstrated capability to run ports efficiently, banks are also comfortable in lending money to APSEZ for acquisitions,’ said an investment banker.
The stress facing many single terminal or stand-alone single port operators, in the wake of the COVID are making them sitting targets for take over at reasonable valuations, particularly reflected in the case of Krishnapatnam and Gangavaram.
APSEZ’s size and capability
Despite the industry fears over the growing size of the APSEZ empire, Singhal opines that it could become ‘even bigger’. ‘Even today, APSEZ is under-estimated,’
‘The port and logistics field are open to all, but others Indian business houses could not make it because they did not have the management capability and the vision to grow bigger. It is not Adani’s fault,’ he said referring to concerns that rivals have been left far behind.
For instance, the erstwhile UK port operator P & O Ports (which was later acquired by D P World) approached the Tata Group for a partnership when it was building India’s first private container terminal at JNPT in the late 1990’s. ‘But Tatas declined the offer and lost the opportunity to enter a sector which would have fetched high value proposition to the Group and made it a big player,’ the executive who made the offer to Tatas said.
APSEZ’s model, according to Singhal, is to offer integrated solutions to customers. ‘The game is not just ports, the game is ports, hinterland transport and logistics parks to provide single window supply chain solutions to industrial clients,’ he said.
APSEZ is efficient, can raise huge capital and has integrated into the entire logistics chain encompassing ports, container trains, dry ports and multi-modal logistics parks, he said.
‘If ports give X revenues, hinterland logistics could give 3-4 times more revenue,’ he noted. In contrast, the margin from port business is as high as 70 per cent whereas in inland logistics, it could be about 15per cent.
Once APSEZ has control over the hinterland cargo, Adani would control large swathes of national supply chain which in turn would augment Adani port volumes and port profit margins creating a value enhancing virtuous circle. That’s the game plan,’ he added.
Source: MENAFN
