| Colombo
Port expansion finally gets underway
This project will elevate Sri Lanka
to a world-class port and terminal management capability.
It will enable us to develop and export these skills
internationally by bidding for the management and operation
of terminals in other countries, as well as strengthening
our service delivery as a logistics hub/gateway
The Colombo Port Expansion Project,
which has finally reached fruition with the funding
MoU being signed on September 6, is expected to begin
its harbour (breakwater) construction in early 2007
with the first terminal - south terminal - being ready
by 2010.
“This project will elevate Sri
Lanka to a world-class port and terminal management
capability. It will enable us to develop and export
these skills internationally by bidding for the management
and operation of terminals in other countries, as well
as strengthening our service delivery as a logistics
hub/gateway,” noted an elated Saliya Wickramasuriya,
Chairman of the Sri Lanka Ports Authority (SLPA).
The project had been on hold since
late last year due to ADB conditions that funding would
be based on privatization of port management and reforms.
The ADB then agreed to be flexible in its demands as
timelines for the project got tighter. Port sources
said ADB agreed to relax itsearlier requirement to form
JCT Co Ltd as a precondition for the loan.
The decision to sign the MoU between
the government and the ADB to fund the first phase of
the project was exclusively reported in The Sunday Times
on September 3.
The Port chief said it was important
to expedite the process of construction management and
concession negotiation to enable the new port to be
commissioned by the end of 2009. Due to the late start,
the project management schedule does not leave room
for any delays.
He said the loan agreement with the
ADB permits the SLPA to own a percentage of all terminals,
as well as permitting an entity such as JCT to seek
out international partners, form consortia and bid for
ownership and management of any of them. This flexibility
will allow SLPA to expand operations as the business
grows, and not be limited to the capacity of the existing
Colombo Port. SLPA is already working on strategies
to attract partners with the most value addition in
the form of experience and shipping volume to maximize
the utilization of the new port, he added.
According to an official note on the
expansion plan, the project will enable the Colombo
Port to retain its transshipment hub port status for
South Asian region by increasing the number of containers
that can be handled and allowing bigger container ships
to call on Colombo with increased harbour depth from
the average 15 to 18 meters.
The current capacity of the Colombo
Port is 3.4 million TEUs. Last year the port handled
2.46 million TEUs while this year it is expected to
handle 2.87 million. “This capacity is increasingly,
becoming insufficient to handle the increased demand
and will be totally insufficient by 2008. The first
new terminal under this project is expected to add a
capacity of 2.4 million TEUs to the Colombo Port,”
the statement said.
ADB will provide Sri Lanka a loan
of US$ 225 million while the government will fund the
balance US$ 75 million. While this provides the basic
infrastructure for the harbour, money will have to be
found for the 3 terminals which will cost 300 million
US$ each. The statement said at least the first two
terminals will be financed by public-private partnership
basis. SLPA will be reserved an equity share of each
terminal.
The extent of equity share will have
to be negotiated through an open request for proposals
from major companies involved in shipping and container
handling operations and will take into account the money
to be spent by SLPA on the harbour infrastructure and
any additional capital that can be injected into the
terminal by SLPA. The statement said the government
and the ADB is presently preparing the final loan agreement
for the harbour infrastructure development and concession
agreement for the container terminal.
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