January 24, 2022

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Two Chinese firms take over ECT project phase11 sparking controversy


Two Chinese companies have bagged deals of Eastern Container Terminal (ECT) development project phase11 arousing suspicions of underhand dealings, Sri Lanka Ports Authority (SLPA) trade unions alleged.

International competitive bids had been called and six bids had been received for the supply of cranes and civil works of the project.

The Cabinet of Ministers approved the proposal presented by the Minister of Ports and Shipping to award the procurement of 12 ship-to-land cranes and 40 automatic gantry cranes mounted on rails to the Chinese company, Shanghai Shenuma Heavy Industries.

Asked why there were no Indian bidders since  India is associated with another terminal in , a senior official said not a single Indian company had offered a bid and added that even Indian and US ports use Chinese cranes.

The total cost for the purchase of these cranes would be US$ 250 million in accordance with the contractual agreement, General Secretary of the All Ceylon General Port Employee Union, Niroshan Gorakanage disclosed.

However he noted that the SLPA is now trying to release an advance payment of $50 million to the contractor after it has opened a Letter of Credit (LC) at a state owned bank.

The Chinese company will have to supply the relevant cranes in the year 2024; he said adding that it is not clear as to why the authority is in a hurry now to make this payment from its dollar account at the state bank at the time of dollar scarcity.

He alleged that there was a suspicion about underhand dealing in this transaction and this money may go to any outside party as a 20 per cent commission.

The SLPA has the authority to make an advance payment as it has agreed to adhere to the terms and conditions of the Chinese company, a senior official of the Ministry of Ports and Shipping who wished to remain anonymous told the Business Times.

He categorically stated that the tender procedure had been carried out in a transparent manner and there were no irregularities in awarding the tenders.

When asked to clarify this matter a former finance ministry top official pointed out that a contractor may request an advance payment to help them meet significant start up or procurement costs before the construction commencement.

But the client should require an advance payment bond which secures the payment against default by the contractor, he opined.

However no such requirement has been stipulated in the tender documents or in contractual agreement, informed sources confirmed.

In regard to the Port Eastern Container Terminal – Phase II- Civil Works, the Cabinet had approved the development of the Eastern Container Terminal in stages as a terminal totally operated by the Sri Lanka Ports Authority.



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