1st Terminal of Colombo South Harbour with China Merchant Holding to Go Ahead. Adds 2.4mn TEU Capacity to Sri Lankan Port

08th August 2010, www.nation.lk

The last remaining hurdle standing in the way of clinching the 35-year Build Operate Transfer (BOT) deal to construct the 2.4 million TEU capacity first terminal of the new Colombo South Harbour, was more or less ironed out on Thursday, when Attorney General (AG) Mohan Pieris proposed a compromise solution to the lead bidder’s request for a Government guarantee to get the loan capital from banks.

At Thursday’s meeting, a senior representative of the lead bidder, China Merchant Holding (CMH) had been present with their lawyer.

Shipping sources said the terminal, originally estimated to cost US$ 450 million, would be funded by 30% equity and 70% loan, and the consortium had wanted a guarantee from the Government to facilitate the loan component. Since such a guarantee was not in the Tender documents, and no such guarantee was given to the other privately managed terminal in the Colombo Port, the South Asia Gateway Terminal, which too is on BOT basis, the Government is now not in a position to change the terms of theoriginal Tender documents.

The AG has however, proposed some other method to comfort the banks into funding the terminal.

Sri Lanka Ports Authority (SLPA) Chairman Dr Priyath Bandu Wickrema said last night that, with this final hurdle out of the way, they were confident of issuing the Letter of Intent to the CMH-led consortium in the coming days, to get their act together here on the ground, and hoped to sign the BOT contract with the consortium within six months, for the work proper to begin.

Already, Korean contractor Hyundai, who has undertaken the construction of the 6,000-metre breakwater for the new harbour, funded by a US$ 300 million loan from the Asian Development Bank, has completed a 2,000-metre stretch for the building of the first terminal.

The consortium that bid for the first terminal of the South Harbour is led by CMH with a 55% stake, Aitken Spence 30% and SLPA 15%.

The Colombo Port being the hub port for the sub continent, is assured enough and more container traffic, with India’s annual container traffic alone now projected to grow to 21 million TEUs in five years, from 9.1 million TEUs registered in 2008.

Related Info:
Colombo South Harbour Development Project