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by Ravi Ladduwahetty

The Hambantota port, which will be the epicentre of the southern development program, will help to draw 36,000 ships which are already bypassing Sri Lanka, Minister of Southern Regional Development Ananda Kularatne told the Daily News in an interview.

The feasibility for the port will take eight months and three years for the completion and business should boom then, he said.

The proposed sea port will also have an international airport like in other countries. There is an investor who wants 20,000 acres for operating a regional aviation hub there where air cargo in Asia is consolidated in the area and distributed worldwide, he said.

There are also firm inquiries for three or four thermal power plants in the South, One is coal and the others are diesel. The Ministry will declare Hambantota as an Investment Promotion Zone which will enable any investor to set up business there and the prospects are extremely good with the peace process, he said.

The interview:

Q: The Government has demarcated the country into five economic zones. Speculation is rife in political circles that the Provincial Councils will be abolished soon and the power devolved to these five zones. Your comments ?

A: This was the vision of Prime Minister Ranil Wickremesinghe. We believe that the creation of a Ministry of Southern Regional Development was instrumental in our getting the Hambantota Port Development Project.

We are working in coordination with the line Ministries and state institutions.

Q: But the question is the imminent abolition of the Provincial Administration and replacing them with the five zones to which political powers will be devolved. What is the true situation ?

A: The Government has not notified us on the modalities of devolving power. However, we are working very smoothly with the Southern Provincial Council. Our priority is to get mega-buck projects to all five districts- Galle, Matara, Hambantota, Ratnapura and Moneragala. We are currently working with the Ports Ministry on the Hambantota project and the Ministry of Power and Energy about the oil refinery project.

Q: The Southern Development Authority was floated with much fanfare by the PA regime. There was a grandiose proposal by then SDA Chairman Navin Gooneratne of making Hambantota a garden city like Singapore where a block of 68,000 hectares was to be set out and named Ruhunupura. But, cynics say that not even a culvert has been constructed. Will all your projects will also end like that ? How would you avoid getting into such a situation ?

A: The truth is that the southern development was envisioned by the Prime Minister in 1980s and 1990s when all these plans were made. I was Deputy Minister of Highways at the time.

The PA is taking the credit. So was the Hambantota Port, expressways and the airport. We had also extended the Matara- Kataragama railway up to Walasgala and the dates were set out to open it. But, the Government changed. It was I who spoke in Parliament in 1998. The PA set to develop the south through the formation of the Ruhunupura and SDA. They even printed a brochure setting out all these projects.

Q: But, the photographs of the brochure were taken from the roads in Malaysia which had six lanes ?

A: They had to do that to impress investors. Despite that backdrop, they did not come. They did not have the confidence in the PA and coalition Governments. That is the difference in the policies of the PA and UNP Governments. The then SDA Chairman was then moved to the Treasury as a consultant and another came. The operations fell and the SDA came to the level of distributing cattle, vegetable seeds and plant material etc. We have revived these projects. Now the situation is different.

Q: The PA awarded Letters of Intent to seven mega-buck southern projects valued at Rs. 106.4 billion. The contract for the US$ 400 million Hambantota port was awarded to Citadel Dynamics in collaboration with Marshall Macklin Monogan and BFC Civil of Canada, the US$ 270 million super highway, the US$ 500 million oil refinery and the US$ 340 million electrified Southern railway to the Chenzhou Engineering Group of China, the US$ 250 million power project and the US$ 15 million Menik Ganga diversion project to Lahmeyer International GMBH of Germany and Sumitomo of Japan. What is the status of these ? Are these still valid ?

A: These are given for a stipulated time. If the dates have lapsed, they are invalid. I have also directed the Government Agent to recall all lands which have been given for such projects which are now currently not being used.

Q: The Government has awarded the Hambantota feasibility to a Canadian firm which will do it free. Does it mean that the Government is obliged to award the construction tender also to a Canadian firm by virtue of this ?

A: No. If the project is feasible, anybody will be free to bid within accepted norms. It will be on a Build- Own and Transfer basis.

Q: The Hambantota Port will be the nerve centre on Southern development. The land expanse available is around 20,000 hectares against 40 acres in Colombo and Galle. How would you use this advantage for container transhipment operations and other aspects of cargo handling such as Multi- Country Consolidation and also as a regional cargo hub ?

A: Yes. you are right. The Hambantota Port area is a gold mine and very few people knew it. The advantage of this is that Hambantota is only two miles away from the main sea route. There are 36,000 ships which arrive from the Suez Canal and also from Cape Town and also en- route to Singapore for refuelling. Only 4200 ships come to Colombo. Hambantota is a good point to intercept this route which will be very profitable for Sri Lanka.

Q: What is an assurance that all these ships will stop in Hambantota ? To use a pithy example in lighter vein, if you are living at Galle Road, Colpetty and if you erect a bus halt in front of your house, what is the assurance that all the buses will stop at your halt ?

A: This has been on the rationale that ships' crew want to get to a port at least within a week. There are at least 2000 people in these ships which means that hotels in the area will develop. Hambantota is ideally suited. Moreover, Sri Lanka could provide all requirements for these ships- providing refuelling and bunkering. Everybody was aware of this after I raised this in Parliament.

Singapore and Colombo were on par in 1980 with 1.2 million containers. Colombo's expansion will go up to 1.8 million by 2005. Singapore which now handles 18 million containers, has plans for 35 million containers per year in 2005. We could draw from this advantage.

Q: The development of the Galle port was commenced by the UNP in 1993 following the Japanese International Cooperation Agency (JICA) team headed by Haruo Okada, Head of the Overseas Coastal Development Administration of Japan providing a feasibility report. The PA also wanted to pursue the project and awarded a Letter of Intent (LOI) to the Mott Mc Donald Euro China Consortium which ran into financial constraints in raising around US$ 750 million with the Malaysian partner to the consortium having difficulties due to the South Asian financial crisis. Will be the project be pursued now ?

A: Yes. The Ministry of Ports and Shipping and my Ministry is conducting discussions in this regard. This will be good for yatchs and other small cargo ships which bring import cargo from India.

Q: Experts believe that the Hambantota port is more feasible due to its strategic location and also due to a deeper natural seabed in contrast to Galle where the seabed is full of rock. Dredging is mandatory. Therefore Hambantota is said to be more cost competitive. Your comments ?

A: Yes. The Hambantota seabed is 20 metres deep and more cost competitive but the Galle port could be used for ship repairs etc and could be very profitable. Ports could be developed as the sea area that surrounds Sri Lanka is eight times larger than the geographical land area.

Q: But we still import 65 percent of our salt requirements despite the large sea area ?

A: We have a lot of lagoons. Lanka Salt should be further privatised to develop the salt industry.

Q: What is the status of the oil refinery project ?

A: There is an investor who is wanting to set up an oil refinery at Mirijjawila, desalination plant to provide water and a 200 MW thermal plant. We will give them 1000 acres.

They will process 165,000 barrels of oil daily for export and refuelling ships. This will provide at least 3000 employment opportunities. The investment is around US$ 1.6 billion.

Q: What is your vision to solve unemployment which is rampant in the South which caused youth insurrections?

A: These projects will solve these problems. The Hambantota District has 137,000 families and all will have jobs and in addition to the others in the other four districts.

Q: During the PA regime, the SDA reportedly failed due to the Government wanting equity in the form of bonus shares. Will this continue ?

A: No. We will give the investors the freedom to invest and work their profits. We will benefit from the land leases and the employment opportunities and the funds circulating in Sri Lanka. The SDA is a service oriented organisation and not profit oriented.

Q: What is the base for value added agro-industry using the ideal raw material base ?

A: There will be an ideal base for fruits and vegetables which could be processed and supplied to ships. This is only one of them. There are investor inquiries as well. There are also inquiries for ilmenite industries for which the raw material is found between the shores of Ambalangoda and Hambantota.

Q: There is supposed to be silica in abundance in Embilipitiya. Can you think of a Silica Valley project such as in Califonia ?

A: Yes. There is a lot of this product in Mahagama which could be manufactured for export markets. We are negotiating with some companies.

Q: What would you do to boost investor confidence ?

A: By giving him the requisite infrastructure and other approvals expeditiously. We have identified the areas in which projects could be developed. This includes eco-tourism. There is also a 577 program which will draw private sector investors to develop the 577 AGA Divisions in the Hambantota District. The Government will need funds only for infrastructure development which will be funded by donor concerns.

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