ADB funds for Colombo new port next week

The Asian Development Bank will make a first payment of US$ 29 million to Hyundai Engineering Co. next week, which is the Bank’s share of the mobilization fee due to the Korean firm to begin work on the breakwater of the new Colombo South Harbour, a Bank spokesman said.

The total cost of the breakwater and the dredging is now estimated at US$ 350million, excluding the Value Added Tax and the ADB has agreed to provide funding to the tune of US$ 300 million with the balance to be met by the Sri Lanka Ports Authority (SLPA).

Project Director of the new harbour Chief Engineer Janaka Kurukulasuriya said the SLPA paid its share of the mobilisation payment amounting to Rs. 920,000 million and the Koreans were already dredging the area. He said more than 600,000 cubic metres of sand already dredged by the Korean contractor have been laid as the foundation for the breakwater. Over the sand layers granite rocks will be deposited.

Engineers point out a problem they have encountered in finding 20 tonne rocks to top up the breakwater from 20 feet below the waterline. The Chief Engineer said it has been resolved to overcome the problem by fabricating equivalent size concrete blocks.

ADB Colombo Country Director Richard W.A. Vokes said under an amended funding agreement for the project approved by the Bank’s Board at the end of April the concept of the project as a Public-Private Partnership remains unchanged and the selection of the operator for the terminal following an open competitive procedure in accordance with the country’s laws and procedures also remains with the award of the terminal ‘concession’ to be made within 18 months.

Hyundai Engineering won the tender for the construction of the breakwater and the dredging in September last year and funding for the project was approved by the Bank as far back as February of that year. But the contract could not be awarded earlier due to the stipulation by the ADB that funding would depend on Colombo following an open competitive bidding process in awarding the contract to build the new harbour’s first terminal.

In early February this year, the Government awarded the contract to build the first terminal to Hutchison Whampoa Limited of Hong Kong, although Hutchison was the second highest bidder. Shortly afterwards President Rajapaksa cancelled the award and announced a decision to call for fresh bids on the basis of a Cabinet decision to ensure protection of the national interest in the future awarding of contracts. In the meantime the Government also approached the ADB to agree to fund the breakwater without strictly sticking to the earlier stipulations as delays would entail huge cost overruns.

Despite the several months’ delay, Mr. Vokes now insists that the project is on track.