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Busy future for the nation’s ports

Interview - February 13, 2012
Dr. Priyath B. Wickrama, Chairman of Sri Lanka Ports Authority (SLPA), discusses his organisation’s role in making Sri Lanka a maritime hub for the South Asia region
DR. PRIYATH BANDU WICKRAMA, CHAIRMAN OF THE SLPA
DR. PRIYATH BANDU WICKRAMA | CHAIRMAN OF THE SRI LANKA PORTS AUTHORITY (SLPA)

How do you see the shipping industry in the next 10 years and what does it mean to Sri Lanka?

As the shipping industry is booming as never before amidst the challenges of the recent global recession, we are confident that we’ll be able to compete with countries like Singapore. During the recent times, SLPA was getting a lot of requests from various service providers in the region, specially located in Dubai and Singapore. From Singapore they can easily feed the east coast of the Indian subcontinent and from Dubai the west coast could be easily fed but from Sri Lanka anyone can easily feed both coasts in the sub-continent. His Excellency President Mahinda Rajapaksa is committed to develop the ports and the port sector of this country and the government’s target is to reach the 40% contribution from the port and the port related industries towards the GDP of Sri Lanka by the year 2014. By that time we will have two mega ports fully operational and controlling the Sri Lankan economy with the support of the private sector. In 2004 we reached 2 million TEUs. In 2006 it was 3 million TEUs. We had a drop in 2009 but this year we will be passing the 4 million TEU mark. We are targeting to reach 10 million TEUs by 2020. According to the feasibility study report by Scot Wilson in 2004, there exists 3 cases. The lower case, the medium case and the upper case. Starting from 2004, we are going well above the upper case. We had a small drop in 2009 but now we have picked up and at the end of this year we will reach the 4 million target, whereas at the end of 2011 we will reach the 4.5 million TEU target. According to the said study, we were expected to reach the target of 4.5 million which is the existing port capacity by the end of 2012. But as per the current growth rate we are reaching the maximum, one year ahead of the expected date. That is an alarming situation and currently we are trying our best to minimize the effect on the point of reaching the maximum by 2011. Compared to last year SLPA is growing at a rate of 23.9%. This growth means the occupational time for a vessel within the terminal is increasing. The situation creates congestion in the Port of Colombo. Not only the Jaya Container Terminal but the other terminals are also growing fast. SLPA handle 24 main line operators and 14 feeder operators. SLPA has taken a number of steps to rectify many of the constraints prevailing at the SLPA. First and the most important thing is the introduction of the new Terminal Management System. We implemented the first step in May in 2009 and currently we are trialing the GPRS module at the Unity Container Terminal of SLPA. It will sooner be implemented at the Jaya Container Terminal as well. The process will definitely improve the yard situations. And with all these new additions we will have a fully operational Terminal Management System in place by the end of this year. SLPA is also in the process of purchasing 06 brand new gantry cranes, 30 yard cranes and 50 yard tractors to improve our productivity. The yard renovation activities have also been completed. Hence the yard capacities will be improved. The infrastructure including the road system will also be developed.  In this view, SLPA has introduced few more systems. The NAVIS Cargo Handling Module will sooner be implemented.  The module when in operation will give a better service. By January next year the on-line facility will be available. SLPA has also finalized the design to have a central administration building of 22 stories with 350000 square feet. The construction is expected to be completed within 18 months.  Meanwhile 27 acres of land will be developed as a modern cargo village with a rail/road link. In the year 2009 SLPA has invested 286 million US $ and in the year 2010 SLPA is investing 386 million US $; the investment of the private sector was 248 million US $. It will invest another 305 million US $ next year. The private sector investment including the Colombo Port Expansion Project (CPEP) will be 440 million US $. In 2012 another 190 million US $ will be invested by SLPA and the private sector involvement will be 320 million US $. In addition to that SLPA is investing on Magampura phase two as well as the Colombo land fill.

The Sri Lanka Ports Authority is all geared up to open the new Port of Magampura. What is your business plan for this port?

Magampura is a mega project and its phase one will be geared with four berths. All infrastructure related to the phase one of Magampura Port Project will be completed by November this year. Initially general cargo and industrial type cargo will be handled. Container handling cranes will also be installed as there will be containers as well. They will also be helpful in handling general cargo. Bunkering, Cement, Fertilizer, Sugar, LP Gas, Ro-Ro handling facilities, Ship building and repair and all other port related activities will be born at the new port. It will be a free trade zone. There will be no custom involvement within the port. Anyone can value add, pack and assemble with all duty free and tax free facilities. There is no need to pay anything other than the port charges for the exports within the port. But if anyone who is interested to get into the local market from there, could do so adhered to the prevailing normal procedures with taxes and duties. Opportunities will be open for cement grinding plants, cement storage and bagging plants, fertilizer storage for assessing and also bagging plants and LP Gas distribution facility as we are constructing 3 tanks of 2000 ton capacity each and there will be gas handling facility at the berth. Also there will be vehicle assembling plants, flour mills, food processing and packing facilities and other related facilities. Ship repair and ship building facilities will be called soon at Magampura Port. The ship repair facilities could be commenced even without a dock yard as a floating dock could be accommodated easily within the port. RFPs have been called and investment opportunities based on guaranteed royalty, additional royalty and fixed lease payment. The initial investors will get several concessions as this is a brand new port and there exist the necessity of attracting investors. Annual leasing calculation method will be a fixed system. A simplified method will be utilized to select investors. There will be an equation depending on the distance from the quay wall and the square area.  Once the offers close on the 15th October one month will be taken to evaluate and in November this year, the letters of intent will be issued. In the same month the port will also be operational. Investors will get better service and facilities there without any waste of time.

SLPA is developing the new ports in Colombo and in Hambantota. Do you see enough business for both ports as the investments are very large?
 
The Government of Sri Lanka has identified the expansion of the Port of Colombo to cater for the increasing demands of services in the international shipping industry especially in the business of container shipping in the region. With a view to the realization of full potential of the development of harbor facility in Magampura and the recognition of integrating port development with regional development, the Port of Magampura is being developed. And as the port of Colombo is reaching its maximum capacity for all types of cargo, another suitable and efficient port is needed with all facilities to cater to the increasing demands of maritime transportation and customer services. This will be the biggest service and industrial port in the country constructed closest to the international maritime route. It is the nearest point to the main shipping route that connects East and West.

What do you think of the regional port development? Is it an opportunity or challenge to Sri Lanka?

Asia is the fastest growing region in the world led by China, India and the ASEAN group. The infrastructure capabilities of Asia have to increase, and the region needs port development as cargos originating from Asia is growing at a rapid phase.
 
The SLPA is confident that the two new ports in Magampura and Colombo could attract large volumes from the region and would be one of the most challenging projects for other regional competitors as the real location for a hub is geographically located in Sri Lanka and no one can deny that. Therefore once the infrastructure is developed and a business conduced environment is created, we are confident that we can deliver "speed" & "reliability" that would be a distinct advantage to the service users. Regional ports too have to develop to handle increasing volumes and to facilitate feeder vessels, therefore our view is that regional development is an opportunity for us as we hope to be one step ahead in the business of port operations and management.
 
Currently the transshipment cargo from the Indian Sub Continent is being sent either through Colombo, Singapore or Dubai.  The new ports in Sri Lanka have been designed in keeping view of these regional flows of cargo and to attract greater market share in the transshipment business.

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