East Container Terminal:
As the Sri Lanka Ports Authority (SLPA) last week called for Expressions of Interest for the East Container Terminal (ECT) of the Colombo Port, the Business Observer learns that several key players have shown keen interest in coming to Colombo.
senior government Minister said among the interested parties is the Port of Singapore Authority (PSA), a highly successful global port operator with facilities in several parts of the world.
The Minister who met the chief executive officer of PSA in Colombo recently said: “They are bullish of the prospects for Colombo which has potential to become ‘the service provider’ for this part of the world when the middle classes of India, Pakistan and Bangladesh begin to exercise their ability to spend very soon.”
Deputy Foreign Minister Dr. Harsha de Silva said trade of goods going through Colombo will be massive – and it makes so much sense for Colombo to be ready to be the logistics and shipping hub in the region and become a key part of the global production network. The SLPA hopes to award a BOT concession for the East Container Terminal of Colombo Port and this invitation for Expression of Interest (EOI) is the pre – qualification stage and the first step in the process leading to the selection of a Concessionaire for the award of a BOT concession.
According to the announcement through the SLPA website, “The ECT in its present form has a 440m long, 18 m deep quay wall, a 20-hectare yard area and connected facilities developed by the SLPA. The Concessionaire has the advantage of deploying container handling equipment upfront and operating the existing facility while developing the rest of the terminal.
“It is the expectation of SLPA that the Concessionaire will commence ECT operations in the shortest possible time and develop it into a fully fledged terminal facility with equipment and systems run on state of the art technology.
“It is also expected that the Concessionaire will have the market access to acquire additional transshipment container volumes, apart from handling the organic volume growth.
The ECT will be managed and operated as a common - user/open access terminal.”
The Asian Development Bank has been appointed to provide the transaction advisory services in the process of selection of a Concessionaire.
When the Sunday Observer of May 22 highlighted the delays in the bidding process for ECT, Minister of Ports and Shipping, Arjuna Ranatunga wrote to Observer Business saying, “It was the decision of the government that prevented SLPA from going ahead with procurement as the government decided that SLPA should no longer depend on loans as the loans already taken for development of Hambantota port has placed it in an extremely difficult financial situation.
“The government directed the ministry and the SLPA to include provision of equipment for phase 1 facilities to the ECT development project so that the private sector investor would carry out this as well.
“As for the ECT Public Private Partnership project, the ministry and SLPA were proceeding to get cabinet approval to launch the RFP process when the government decided that ADB should work as the transaction advisor to SLPA and the process is now in progress and the EOI is expected to be launched within weeks from today (May 23).”
Minister Ranatunga further said, “The Project envisages selection of the new Terminal operating entity by first quarter of 2017 and the full development of the Terminal would be completed by end of 2018 as building the balance part of the quay walls, reclamation of the yard area, building of the related facilities and procurement of equipment would naturally have a minimum of 18 month lead time from the starting date.”
The Ministry of Ports and Shipping and SLPA have plans to develop Colombo keeping abreast with the world class hub ports including PSA, Hong Kong, Antwerp, Rotterdam, Dubai, Port Klang and Port of Tanjung Pelepas.
“SLPA will move in the same direction by adding more capacity whilst retaining and improving existing facilities,” Minister Ranatunga said in a statement.
It said, “ADB and SLPA recently hired Drewry consultants to carry out a demand forecast for ECT project which proved that JCT very much figures in the future of Colombo as a Terminal with 2.8 million TEU capacity that would keep handling the ships that do not require the type of berths and equipment supplied by current and future Terminals of South Harbour.
“As indicated by the Drewry consultant’s traffic forecast, the port will require all existing terminals and their capacity by this time (2018) to meet the demand and retain Colombo’s leading position amidst competition.
Meanwhile, Deputy Minister Harsha de Silva said in a recent interview with the Business Observer that the government’s ability to invest large amounts of money for infrastructure development such as ports is limited.
“We are running a current account deficit in the Budget – not in the exports - but in the Budget - which means we don’t have even tax money to pay for day-to-day expenses,” he said.
“Officials who are responsible for taking decisions in connection with major government decisions should start thinking out of the box and promote what are called PPPs to attract investors to work with the government in expanding the logistics services – such as ports, airports and container terminals,” the Deputy Minister said.
(SO - 12062016)