The signing of the Built Own Transfer (BOT) Agreement for the first terminal at the Colombo South Harbour, took place on Friday the 12th in Shenzhen, China.  The construction of this terminal is one of the largest Public Private Partnership (PPP) projects taken off the ground recently in Sri Lanka and the signing occurred coincidentally with His Excellency the President’s state visit to China to attend the opening ceremony of the 26th Universiade Shenzhen 2011. The signatories to the agreement were China Merchants Holdings (International) Co., Ltd. (CMHI), Aitken Spence PLC and the Sri Lanka Ports Authority (SLPA), holding 55%, 30% and 15% stakes respectively and the joint venture thus formed for the project was the Colombo International Container Terminal (CICT) as the operating company.  The historic signing ceremony eventuated at Shekou’s Nanhai Hotel with CMHI Managing Director, Dr.Hu Jianhua, Aitken Spence Deputy Chairman and Managing Director Mr. Rajan Brito, SLPA Chairman Dr. Priyath Bandu Wickrama and SLPA Managing Director Capt. Nihal Keppetipola participating as   signatories.  

The expansion of the Port of Colombo has been identified by the government as the flagship development endeavour in the current decade, targeted at giving Colombo a competitive edge over other regional ports. The Phase 1 of Colombo South Harbour, envisaging three terminals of over 1,200m in length each to accommodate four berths alongside depths of 18 meters with provision to deepen to 23 meters to accommodate deeper draft vessels in the future, is scheduled to be carried out in stages. The first stage involves the development of basic infrastructure with public funds, i.e. the breakwater, which by now is over 66% completed and the second stage involves the construction of the South Container Terminal on a BOT basis with Public-Private Partnership (PPP) for which the SLPA entered into an agreement last Friday.   Building of East and West terminals will be undertaken in later stages. The remainder of the infrastructure building will be carried out simultaneously with the construction of the South Container Terminal. 

The China Development Bank Corporation has agreed to fund the project with a loan facility up to US$ 350 million and the rest of the capital is to be raised by the shareholders equity. The first 600m quay length of the South Container Terminal is expected to be open for operations by December 2013 and the entire terminal consisting of four berths of 300 M each will be completed there after. At the end of the 35 years of BOT concession period, the whole terminal infrastructure will be transferred to SLPA at no additional cost. 

The South Container Terminal when completed will provide a harbour basin of 18m depth, to accommodate most modern container megaships and have a handling capacity of 2.4 million Twenty Foot Equivalent Units (TEUs) and when the Phase 1 of the project becomes fully-blossomed with three such terminals each having a capacity of 2.4 million TEUs will cater for additional 7.2 million TEUs over the existing capacity of the Port of Colombo, undoubtedly making Colombo the mega hub in South Asia.
 

Relations between China and Sri Lanka have reached a peak level, especially during the Administration of His Excellency the President Mahinda Rajapaksa. The Chinese assistance to various sectors of Sri Lanka is on a very high level, and is very apparent in the port sector. After the establishment of the People’s Republic of China, Sri Lanka was one of the countries that recognized it at the initial stages. The first bilateral agreement between the two countries was the Rubber – Rice Pact which was entered into in 1952.  

Also present at the signing of the agreement were Deputy Director of Asian Affairs of Chinese Foreign Ministry Sun Wei Don, Chinese Ambassador Extraordinary and Plenipotentiary of Sri Lanka Yang Xiu Ping, Sri Lankan Ambassador to China Ranjith Uyangoda and other guests from China Merchants Group, CMHI, Aitken Spence PLC., SLPA, China Development Bank, China Export and Credit Insurance Corporation, China Harbour Engineering Company etc,. 

This venture augurs well towards the fulfillment of the pledge made by His Excellency the President Mahinda Rajapaksa that Sri Lanka is not far away from the day of becoming a major Logistical Hub offering advanced support services in the region.
(CPRD-16082011)