Friday Dec 13, 2024
Friday Dec 13, 2024
Saturday, 17 December 2011 00:00 - - {{hitsCtrl.values.hits}}
By Uditha Jayasinghe
Sri Lanka’s largest foreign direct investment project of US$ 500 million to triple the Colombo Port’s capacity was lunched yesterday by President Mahinda Rajapaksa.
A consortium consisting of China Merchants Holdings International (CMHI) and local conglomerate Aitken Spence was awarded the tender for the construction and operation of the Colombo South Harbour Expansion Project.
The deal, which is valued at US$ 500 million, includes building a container terminal that will nearly triple the capacity of Sri Lanka’s main port.
The single largest Foreign Direct Investment deal to enter Sri Lanka to date, it will increase the TEU capacity by 8.5 million pushing the current 4.5 million capacity to 13 million by 2016.
Colombo International Container Terminals (CICT) was created as a company incorporated in Sri Lanka, with CMHI being the majority holder with a 55% stake, Aitken Spence 30% and the Sri Lanka Ports Authority (SLPA) 15%, in August 2011. CICT entered into a Build, Operate and Transfer (BOT) Agreement with the Sri Lanka Ports Authority, for period of 35 years.
The groundbreaking ceremony for this terminal was literally flagged off by Sri Lankan President Mahinda Rajapaksa in the midst of many Chinese and local dignitaries, including Chinese Ambassador to Sri Lanka Yang Xiu Ping.
As Rajapaksa waved a flag inscribed with the logo CICT, the ship began digging for the new venture, spewing a plume of sea water as pirith was recited, marking a rather different “groundbreaking” ceremony.
However, the President did not pause to address the gathering, which included a large contingent of CMHI employees and was whisked away while the welcome address was given by SLPA Chairman Dr. Priyath Bandu Wickrama.
Making a short address, Dr. Wickrama praised the Government and pledged to continue converting Sri Lanka into a shipping hub.
“We are indeed proud be the major stakeholder in the development of the South Container Terminal, which whilst being a stimulant to other major investors to Sri Lanka, on completion would stand out to be one of the best terminals in Asia,” said China Merchants Group Chairman Dr. Fu Yuning at the ceremony.
He also commended the Sri Lankan President for his efforts in ending the three-decade long war in 2009 and steering the economy with massive infrastructure projects, most of which are funded by China.
Both he and the Deputy Ports Minister Rohitha Abeygunawardene pledged to continue and grow relations between the two countries.
China Merchant Holdings will provide a shareholder loan facility up to 350 million U.S. dollars with the rest of the capital to be raised by shareholder equity. The first 600m quay of the container terminal is expected to be ready for operations by early 2014 while the remaining two stages are to be completed in 2016.
When completed, the terminal will provide a harbour basin of 18m depth and in the first phase add 2.4 million capacity to the Colombo Harbour. In total three such terminals will be built within the next five years.
