News ≫ Sri Lanka to pick new Colombo terminal operator by year’s end

Sri Lanka to pick new Colombo terminal operator by year’s end

May 9, 2016
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Sri Lanka plans to announce the winner of the bidding contest to operate Colombo’s East Container Terminal by the beginning of next year. With construction of the first container berth at the terminal due for completion before then, the chosen operator will be able to start handling containers very soon after the awarding of the concession, according to the Asian Development Bank.

The ADB, which is advising the Sri Lanka Ports Authority on the transaction, said a request for proposal and draft concession agreement for the project will be released during the third quarter of this year with the winning bidder selected before the end of the first quarter of 2017.

“With increased use of larger vessels in the South Asian transshipment market, development of additional deep-water berths is urgently needed to retain Colombo Port’s competitive position,” said Chaorin Shim of the ADB’s Office of Public-Private Partnership, which helps ADB member countries secure private investment and develop bankable public-private partnership projects.

The East Container Terminal will support the Port of Colombo’s target of doubling container throughput to more than 10 million twenty-foot-equivalent units by 2025. Government figures show Colombo handled 5.185 million TEUs in 2015, representing growth of 5.7 percent over 2014. More than 75 percent of Colombo’s throughput is transshipment business.

The new terminal will add 2.4 million TEUs in capacity when completed. The winning consortium will operate and maintain an existing 440-meter (1,312 feet) berth as well as finance, design, build, operate and maintain an additional 760-meter berth on a 35-year build-operate-transfer arrangement. SLPA will retain a 51 percent stake in the operating consortium.

“We want one leading shipping line in the consortium in order to bring additional traffic and avoid cannibalization at other facilities,” said Shim.

Operators of Colombo’s existing container terminals are not excluded from the bidding process, the ADB said.

Colombo International Container Terminals, which more than doubled its container throughput last year to 1.56 million TEUs, is a joint venture between China Merchants Holdings (International) and the SLPA. China Merchants has an 85 percent stake in the 2.4-million-TEU terminal in which it invested $500 million.

Meanwhile, SLPA and Sri Lanka’s Ministry of Ports and Shipping issued a request for proposal for private investors to assist in the development of an industrial zone at the Port of Hambantota located in the southeast of the island-nation. The RFP seeks bids from investors to develop port-related businesses, industry, and tourism and leisure activities.

The zone is part of the 1,815-hectare (4,485 acres) Hambantota Port Development Project. The first phase of the project, consisting of harbor works including two breakwaters and dredging of the entrance channel, as well as service, general purpose and oil berths and access roads, is complete. The works currently support a growing roll-on, roll-off import and transshipment business and bunkering services at the port.

Much of phase two, which consists of main and feeder container berths, a second oil berth and further deepening of the entrance channel to 17 meters, is nearing completion.

Proposals have been tabled to extend a new expressway connecting Colombo with the southern part of the country to Hambantota and to create an additional link between the port and the Mattala International Aiport. Located around 18 kilometers (11 miles) from Hambantota, Mattala is Sri Lanka’s second international airport but has so far struggled to attract business.

The government also has ambitious plans to develop Sri Lanka’s two other international ports, at Galle and Trincomalee, with the Port of Galle earmarked to become a commercial leisure port.

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