South harbour on track; Chinese lender to finance project

Friday, 4 March 2011 04:18 - - {{hitsCtrl.values.hits}}

By Sunimalee Dias

The country’s new South Harbour Terminal is scheduled to commence construction after 14 March with a Chinese lender set to finance the project worth US$ 500 million.

As part of the committing of finances requirement under the Letter of Intent (LOI) the consortium has now obtained the services of a bank in China in this regard.

In the meantime, work is on track at present in compliance with all requirements including committing of finances, readying the shareholder agreement for execution and ensuring the technical requirements are met under the Letter of Intent (LOI) issued by the Government of Sri Lanka (GOSL).

The terminal’s construction and operation is being carried out by the consortium of China Merchant Holding and Aitken Spence.

One of the main challenges faced during this time was in coming up with the right shareholder agreement.

Sources indicated that currently site investigations have already commenced, with US$ 2.5 million incurred by the consortium before the construction work can begin.

Following this, the Build Operate Transfer (BOT) agreement is to be concluded by June/July.

The project is the single largest FDI secured for an infrastructure project of the Government.

CHM and AS held at least four rounds of discussions as part of the progress reviews carried out by the Sri Lanka Ports Authority. The South Harbour terminal construction is a joint public-private partnership project.

After years of delay, SLPA only managed to attract one bidder for the project, which covers the design and construction of the terminal.

A new port has been urgently needed to expand handling capacity and handle larger containerships being deployed on new routes. The new port would increase cargo handling capacity with the addition of three new terminals.