Challenges of port development

By Cheranka Mendis

While the aggressive expansion plans for ports in the country are being commended by many due to the potential they hold for the future, it has not been easy sailing for the Sri Lanka Ports Authority (SLPA), which has had to face many turbulent waves ever since development work began.

SLPA Director Technical Datta Gunaskara speaking at the morning session of Day Two of the Sri Lanka Ports, Trade and Logistics Conference yesterday admitted that the harbour projects – Colombo South Harbour Projects, Hambantota Port Project and Oluvil Project – have faced many testing times in getting to the stage they are at now.

While the Colombo South Harbour Project started on a high note exceeding all forecasts issued in 2004, even on container volume performance, there is more scope for the port to capture the container volume potential in the market as well as terminal development.

The first terminal concession for the Colombo International Container Terminal has already been awarded and construction work has started. The terminal is expected to come into operation by mid March next year and full capacity is expected by 2016. It is expected to add capacity of 2.4 million to Colombo. “There still is a shortage of capacity coming in that Colombo must fulfil,” Gunaskara said.

Work on the South Terminal is expected to be completed within 2013-2016, to be fully operational by 2020. Plans have already been formed to start work on the East Terminal within the next few months, he said.

“There have been many challenges putting this into place,” Gunaskara noted. The key issues were that the project itself was in a high security area and construction started when the country was still engaged in war. All vessel movements were therefore closely followed and boulders brought in for construction had to be inspected before they were taken in.

“We needed to bring more raw materials from Kalutara and Down South and a rollout point was constructed in Wadduwa to ease the traffic of material transfers. Materials were then brought into Wadduwa and ferried across to the construction site, with contractors incurring additional costs.”

This was by far the least of their problems. With this construction, fishing activities in the area were affected, which impacted negatively on the livelihood of the people. There have also been problems with respect to beach erosion due to construction.

“Within the construction site, the oil pipeline connecting the Colombo Port with the Ceylon Petroleum Storage Terminals Limited (CPSTL) had to be replaced at a cost of US$ 80 million, while the internal road network had to be constructed to maintain container traffic between terminals and new service lines had to be built.”

He noted that the actual finance progress lagged, even though towards the end, by May 2012, it caught up and the project is now successfully moving ahead.

Commenting on the Hambantota project, which is important given the short distance it maintains from the main East-West sea lane, he said: “Hambantota, which had been neglected for years, saw progress with the Government bringing in the port, airport and an extensive network of road connection to the area. This here is a future port city.”

Phase one of the project is now completed with breakwaters in place, a 600 meter general cargo berth and a 300m service berth while the balance will be done through phase two. The oil tank farm has also been completed.

Notably, there is a large area for development of industries such as cement packing, cement grinding, sugar refinery, petro-chemicals, automobile facility and warehousing around the area. Some 40 hectares of land area have been allocated in Phase I and another 100 hectares are expected to be allocated under Phase II.

“The project has been good. Even though costs have escalated, the project is complete and the port is in operation.”

Touching on invitations for proposals for industries in Hambantota in Phase one, Gunasekara said that 21 applications were received, of which the four major industries were chosen. Negotiation work is now on to seal the agreements. The RFP under Phase II is now on.

Developing the Oluvil Port, which was previously a fishing hamlet, SLPA had to bear extra costs on top of the Euro 46 million interest free loan received for the project. Expected to be completed by August this year, behind schedule, Rs. 250 million has been spent on relocating families in the area, Rs. 9 million to build a mosque in the new vicinity and Rs. 200 million as compensation for fishermen. The port now has facilities for fish processing and storage with a capacity of 500 tons.

Colombo Dockyard CEO Mangala Yapa, URS Scott Wilson Deputy Chief Engineer Kane Satterthwaite and Ras Laffen Port Qatar Port Manager Capt. Feisal Saad also spoke at the morning session.

Meanwhile, SLPA MD Capt. Nihal Keppetipola, Drewry Consulting India Shailesh Garg, Bernhard Schulte Ship-Management Group Director Supply Chain Management Dr. Ruanthi De Silva, Mercantile Marine Management Ltd. Director Capt. Rohan K. Codipilly, GAC Oil and Gas Support Services, Indian Subcontinent Region Regional Business Development Manager Arun Julka, Wärtsilä UAE Senior Sales Manager Abdeali Sehrawala and Identec Solutions AG Executive Vice President – Middle East Stefan Schwiers spoke on market supply chain, technology and automation analysis.

Control Risks Global Head of Maritime Security Tim Stear, Nexus Consulting Group President Kevin Doherty, Holman Fenwick Willan Middle East LLP Partner Simon Cartwright, BBC Chartering Manager of Risks Claims and Litigation Andrei Kharchanka and Control Risks Maritime Compliance Manager Jenny Maclean addressed the issues of maritime security and piracy and Sri Lanka’s emerging role at the event.