ADB assistance for South Harbour Development

Chaminda Perera

COLOMBO: The Government of Sri Lanka and Asian Development Bank entered into a MoU on September 06 for the development of South Harbour. This project will boost the capacity of the Colombo Port to meet the raising demands.

The Port which handled 2.46 million TEUs last year, is planned to handle 2.87 million TEUs this year posting a 16% growth. The first terminal of South harbour is expected to be ready in 2010 and will add a capacity of 2.4 million TEUs to the Port.

This project will bring economic benefits to the country by raising the number of container ships to call at Colombo with increased harbour depth from 15 to 18 meters.

The maximum depth of the present harbour is only 15 meters. It is noted that when vessels become larger in capacity, corresponding savings on daily operating costs is 10%. Container ships with over 6000 TEUs are becoming more and more frequent and the harbour depths going upto 18m is a prerequisite to meet this challenge.

The ADB provides US$ 225 million and the balance US$ 75 million will be financed by the government for this project. The three terminals will cost 300 million US$ each.

The first two terminals will be financed by public private partnership basis. The Sri Lanka Ports Authority (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 operation and will take in account the money to be spent by SLPA on the harbour infrastructure and any additional capital that can be injected in to the terminal by SLPA.

The Government and the ADB are presently preparing the final loan agreement for the Harbour infrastructure development and concession agreement for the container terminal to overcome the capacity and depth requirement which is restricting increased container handling of the Port.

The SLPA will take every effort to obtain an income in keeping with the investment and required repayment.