Indian govt asking port firms to invest in Colombo project

Top Lankan firm approaches Indian High Commission to find strategic partner for South Asia's largest, busiest port

The Indian government is keen to promote participation of companies like Adani Group, Tata, GVK and Larsen & Toubro, and public-sector ones, in the development of Colombo Port Expansion Project (CPEP) in Sri Lanka. Besides the private sector, government-owned ports are also being encouraged to take up projects as part of a consortium with Sri Lankan entities.
 
India has been approached by both Sri Lanka and Bangladesh to build ports on their coastlines. Besides, John Keells Holdings, one of the largest private-sector companies in Sri Lanka, has sought the help of the Indian High Commission in Sri Lanka to identify a suitable strategic investor from India to partner in bidding for the East Terminal.

 
Union government-controlled Kandla Port Trust and Jawaharlal Nehru Port are also looking at developing the strategically important Chabahar port in Iran, which will give India sea-land access route to Afghanistan, bypassing Pakistan. India is likely to invest $85.21 million in converting the berths into a container terminal and a multi-purpose cargo terminal.

Investment in Sri Lanka, too, could be beneficial for India. The High Commission of India in Colombo, in a recent letter to the Ministry of Shipping, sought the participation of Indian companies in the expression of interest (EOI) for the East Terminal. The letter says, given the importance of Colombo Port to India as a trans-shipment hub, it would be beneficial if an Indian company was involved in the development and operation of the East Terminal.

 
The Sri Lankan government has been implementing the Colombo Port Expansion (CPEP) by building three container terminal (South, East and West) sequentially with 2.4 million TEU (Twenty-Foot Equivalent Unit, used for measuring a container ship’s capacity) capacity each. The project also involves construction of breakwater and other infrastructure-related works to accommodate these new terminals.
 
The development of the East Container Terminal is being undertaken by the Sri Lanka Ports Authority (SLPA). The first 400-metre section of the 1,200-metre East Container Terminal was commissioned in April 2015.
 
The $330-million East Container Terminal is being financed by the Asian Development Bank (81.7 per cent) and the SLPA (18.3 per cent). “It appears that SLPA is interested in an operator that would also be able to attract traffic to this terminal, in addition to developing and operating it,” said the letter.

 
Of the three container terminals to be developed, the South Container Terminal has already been built by consortium, Colombo International Container Terminal Ltd (CICT) comprising China Merchant Holdings International (CMHI) with a 85 per cent stake and SLPA with 15 per cent. The new terminal is being operated by CICT under a Build-Operate-Transfer (BOT) agreement of 35 years between SLPA and CMHI.
 
Colombo Port (known as Port of Kolomtota during the early 14th Century Kotte Kingdom) is the largest and busiest port in Sri Lanka, as well as in South Asia. Located in Colombo, on the southwestern shores on the Kelani River, it serves as an important terminal in Asia due to its strategic location in the Indian Ocean.

 
The Colombo Harbour is one of the busiest ports and biggest artificial harbours in the world, handling most of the country’s foreign trade.

BON VOYAGE

• Government sources say they’re keen to promote participation of port companies in the Colombo Port Expansion Project (CPEP) at Sri Lanka
   
• John Keells Holdings, one of the largest private sector companies in Sri Lanka, has sought help through our high commission there to identify a suitable strategic investor from India
   
• The east terminal project is being financed by the Asian Development Bank (81.7 per cent) and SLPA (18.3 per cent)