Business Times

Construction work to begin at Colombo South Harbour

By Sunimalee Dias

The Colombo South Harbour development work is expected to commence construction by July/August this year, government sources indicated. The consortium will carry out the terminal’s construction and operation. Currently the Letter of Intent (LOI) issued and all obligations by the consortium of China Merchant Holding (CMH) and Aitken Spence (AS) have been fulfilled in this respect including the Lenders’ Agreement.

The China Development Bank (CDB) was selected as the lender to provide US$300 million for the US$500 million project. This will ensure that the bank will be involved in directly lending to the project.
The CDB is a financial institution in China under the direct jurisdiction of the State Council and has been involved in the financing of large-scale infrastructure development projects.

Currently a team appointed by the Sri Lanka Ports Authority (SLPA) Chairman Dr. Priyath Bandu Wickrama is studying the documents pertaining to this agreement before it is submitted by early this week.

Dr. Wickrama told the Business Times that since there are a number of attachments within the agreement it is still under study. Selection of the lender was a decision of the consortium but now the SLPA is taking into account the conditions placed within the agreement in order to ascertain how this will affect them.

He also observed that they have sent their comments on the shareholders agreement expected to be finalized this month. Next month plans are underway to sign the finalised Build Operate Transfer (BOT) agreement.

Following this within one month of date of finalization of this agreement the commencement for the construction of the civil work will take place by July/August. This will be completed within 24 months with the first phase targeted to complete work of a 600 metres quay length with a capacity of handling 1.2 million TEUs per annum.

The total cost of the project is considered to be also one of the single largest FDI secured for an infrastructure project of the government at US$500 million. CHM and AS held at least four rounds of discussions as part of the progress reviews carried out by the Sri Lanka Ports Authority. The South Harbour terminal construction is a joint public-private partnership project.

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