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Investors eye Trinco
The deep, placid waters of Trincomalee, one of the world's greatest natural harbours, has once again become the focus of attention of major powers as well as foreign investors who are considering a host of investments in and around the port. Indian interest in the port, a former British base that used to shelter the Royal Navy's Indian Ocean fleet during the Second World War, has been revived after being dormant for a long time. Some of the investments that are in the pipeline look set to guarantee a permanent Indian presence in the area. The landlocked inner harbour, surrounded by ridges and low hills atop which some of the fortifications built by the British can still be seen, used to provide safe anchorage for merchant ships laid up and waiting charters before the outbreak of the Eelam war. An underwater canyon runs almost into the harbour mouth and there's deep water close to the main piers. The port has been neglected for some time, largely because of the war. But now that a permanent truce is in place, the government wants to make the best use of its potential. "The most distinct advantage of this harbour is that there's no need for dredging - we have the natural depth," said Gamini Chandrasekera, the Sri Lanka Ports Authority (SLPA) Resident Manager, Trincomalee. "In the last six months - after the cease-fire came into effect - there's been a lot of interest in Trincomalee," said Chandrasekera. The sheltered waters of the harbour, home of the Sri Lanka Navy's biggest base and headquarters of its eastern command, obviates the need to build expensive breakwaters. The navy's Commander Eastern Naval Area, Rear Admiral Sarath Ratnakeerthi, concurs: "There's a lot of potential to develop the harbour. But first we need peace." He is wary of the intentions of the LTTE, which has opened six offices in the town since the formal truce. The Tigers have been infiltrating cadres into the town under the pretext of doing political work and reconnoitering military installations. With peace in the air, potential foreign investors have been scouting around the area in recent months. There's plenty of land available in and around the harbour. Some 5,000 acres of state land is vested with the SLPA. The SLPA, which acts as the guardians of the land, is to release 750 acres for an industrial zone in Kappalturai, near the main highway. Dr. Bandula Perera, chairman of the Industrial Development Board, said the IDB plans to set up an industrial estate on 100 acres that have been allocated in Kappalturai. "We want to set up an industrial estate as soon as possible," he said. "The IDB will also be shifting its regional office from Ampara to Trincomalee." However, there are worries about how the progress of the peace initiative and the role the LTTE is expected to play in an interim administration for the region could affect planned investments. Tamil leaders who back the LTTE are demanding that they be given a decisive role in decisions on future investments (see box). Board of Investment officials said there are fears that disputes may arise in the allocation of state land for planned investments, if the interim council demands that it be allowed to decide on such matters. Although Trincomalee is a world-famous harbour, there has been no sustained effort to develop facilities for merchant shipping, such as berths for general cargo vessels. The sheltered bays of the harbour make it ideal for use by deep-draught merchant ships that carry bulk commodities and containers. "Trincomalee used to be a very busy port," said the SLPA's Chandrasekera. Exports of Ceylon tea once used to be shipped from Trincomalee. Chandrasekera recalled how cargo used to be loaded and discharged with lighters (barges). These craft used to tow cargo between the shore and merchant ships anchored in the inner harbour. It is only now that an alongside berth is being built by the SLPA at a total estimated cost of Rs. 1.3 billion. The 253-metre long, 88-metre wide berth is nearing completion and is expected to be commissioned in August, slightly behind the original schedule. The new berth, with a draught of 13 metres to handle ships of up to 40,000 cwt, meets a long-felt need. The SLPA wants to transfer some of the bulk and break-bulk cargo currently unloaded in Colombo to ports like Trincomalee and Galle. The only two commercial berths available now are two dedicated piers operated by the flour mill owned by Prima Ceylon, a subsidiary of Prima, Singapore, and the Tokyo Cement Co plant, a subsidiary of Japan's Mitsui. The silos of both plants dominate the landscape and at night the Prima mill is lit up like a Christmas tree. Trincomalee, which relies on bulk commodities such as wheat and clinker, had been in the red for years but became profitable following a tariff hike and an increase in cargo volumes. Some 300 vessel call at the port each year and it handles around 1.7 million tonnes of cargo. Among the new industries coming up in Trincomalee is a coal processing plant that is to be built by an Indian firm called Venkatesh Coke and Power Ltd which has offices in New Delhi and Chennai. The plant will produce coking coal for use in Indian steel mills. The proposed Board of Investment project, which will take about two years to complete, has a fairly large "footprint", requiring some 250 acres. Officials from the company have visited the site at Clappenburg, considered the next best location after the Prima site. The Clappenburg ridge is expected to be turned into a jetty with an alongside depth of 12-13 metres. The plant will handle big volumes of coal - around 60,000 tonnes a month. A 110 MW power plant is part of the project that will use the hot gases released by the coal processing plant to drive turbines. A 60 MW barge-mounted power plant is also being considered to be located at Mud Cove by the same firm that has a similar plant at Colombo Port. A foreign firm has shown interest in putting up a fertiliser bagging plant that will be located alongside the SLPA's new jetty. This company will bring fertiliser in bulk, bag it and re-export it. A foreign cement manufacturer, International Cement Traders, is considering setting up a plant to bag cement and sell it in the local market. If this investment does materialise it will provide competition to Tokyo Cement, a joint venture between Mitsui Cement and St. Anthony's Consolidated Ltd. The investment that has drawn the most attention is the agreement to lease part of the Ceylon Petroleum Corporation oil tank farm in China Bay to the Indian Oil Corporation. The deal, signed in New Delhi last week, gives effect to some of the provisions of the 1987 Indo-Lanka Peace Accord which denies the use of Trincomalee to any power inimical to India and gave India first choice in the use of the oil tank farm. During much of the Eelam war, Trincomalee played a vital role in keeping troops and civilians in Jaffna supplied with their requirements. Passengers going by sea to Jaffna embarked at Trincomalee after road communications were disrupted when big chunks of the Wanni came under Tiger control in the mid-1980s. It is from Trincomalee that food and other essential commodities and building materials are shipped in bulk to Jaffna. A handful of shipping companies has been maintaining regular cargo and passenger services between Trincomalee and Jaffna. The ships that ply the coastal trade look set to lose business with the re-opening of the main road to Jaffna. With demand for charters coming down, freight rates are also expected to fall. Govt keen to
attract investments He visited the area recently, accompanied by a team of businessmen and potential investors. "Industrialists in Trincomalee have been left out for a long time - small and medium-scale industries," Bogollagama said in an interview. "Now we want to encourage them and we're trying to see if their needs can be met." Among the businesses that are under consideration are food processing, fisheries and power, while banking services and telecommunications facilities are to be improved. Dialog GSM is considering setting up a tower in the area to widen its coverage. "Trinco's potential lies in becoming a regional air-sea hub," said Bogollagama. "It is ideal for cargo consolidation." The Urban Development Authority is updating a zonal plan that was done in 1993 while the area has been declared a tourism development zone, he said. The Irrigation Department is working on a water supply plan. Tamil leaders
want economic autonomy R. Sambandan, senior Tamil United Liberation Front member of parliament from the area, scoffs at the whole effort, saying that whatever is being done should be by the people of the area and that no big investments should come in until the peace process moves forward. "Tamils who have suffered several decades of discrimination and unequal treatment are not prepared to trust anyone in a hurry," he said in an interview. "We want to decide our destiny, including our economic future, within the framework of a united country." In the past, he pointed out, the beneficiaries of economic development, whether it be in agriculture, industries or fisheries were not the Tamils but people from outside the region. "Trincomalee has great potential in port development, agriculture, fisheries, industries and tourism," Sambandan said. "But the present industrialisation effort is totally ill-conceived. Development must be done in consultation with representatives of the region. We don't want this to be foisted on us from Colombo. Foreign aid will not become available in any sizeable sense unless there's progress in the peace talks." |
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