News

The Colombo Port expansion to accommodate larger container ships, delayed for over a year due to donor demands for better efficiency levels, has been finally approved with the Asian Development Bank and the Government signing on Tuesday the MoU for the first phase of the project.

“We would be signing the MoU this week as the ADB has agreed to be flexible in its conditions based on the Colombo Port’s current project and future management plans,” one senior port official, who declined to be named, told The Sunday Times.ADB sources in Colombo confirmed the MoU pact being signed on Tuesday.

Under the $300 million phase one of the project, ADB will fund the breakwater on the outer harbour on the southern side with $200 million and the balance coming from JBIC (Japanese Bank for International Cooperation) and the government. The second stage would involve the construction and management of a terminal with a per annum capacity of 2.5 million TEUs (per 20 foot container) in a public-private sector partnership.

“This is very good news. It’s long overdue. Nevertheless this will help our port keep pace with global developments,” exclaimed Ashraf Omar, a top garments manufacturer and chairman of the Joint Apparel Association Forum (JAAF). Garments is Sri Lanka’s biggest industrial export and the industry was the first to sue port workers during the recent strike as it led to delays in shipment and losing orders.

The new breakwater due to be completed by 2009 will accommodate the new breed of large and wider container ships capable of carrying 8,000 plus TEUs against 4,000-6,000 capacity TEUs which the Colombo Port can now handle. Industry officials said the new generation of 8,000 plus TEU ships will increase by five to six times its current number and Sri Lanka will lose its regional hub status if it’s not in line with these developments.

The issue has been in the balance since late last year after the ADB imposed conditions to fund the project. About three years ago the ADB lent $10 million for a feasibility study which took into account the design, technicalities and marketing of the proposed expansion.

Once that study was completed, the ADB insisted on the corporatisation (privatization of management) of the port, improvements in efficiency and management reforms, leading to the project languishing for a while last year. The senior port official said the ADB however dropped its demands and agreed to be more flexible as the timelines (deadlines) for the project got tighter.

Soon after the MoU is signed, the port will call for international tenders to build the breakwater and at the same time invite international bids for the construction and management of the new terminal.