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Sri Lanka plans mega expansion of Colombo Port

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COLOMBO : Sri Lanka has initiated initial steps to expand Colombo Port, first by constructing the West Container Terminal 2 followed by the Colombo North Port development as the island nation looks to maintain its preeminent status as a regional transhipment hub for containers, the top official at the country’s port authority has said.

Sri Lanka is one of the world’s key transit hubs, with half of all container ships transiting through its waters. Colombo Port – the largest and busiest transshipment port in the Indian Ocean – has been operating at more than 90 percent utilization since 2021.

A consortium led by Adani Ports and Special Economic Zone Ltd (APSEZ) is building the West Container Terminal at Colombo Port with an investment of some $ 1 billion. The terminal is designed to handle 3.5 million twenty-foot equivalent units (TEUs) a year. The first phase of the terminal with a berth length of 800 metres is expected to start operations by December 2024-February 2025. In the second phase, some 600 metres of quay will be added.

The feasibility study for the West Container Terminal 2 is underway,” Mr. Keith Bernard, Chairman, Sri Lanka Ports Authority said on 8 November in Colombo on the sidelines of a media briefing by the U.S. International Development Finance Corporation (DFC) to announce an investment of $553 million (about Rs4,600 crore) in the West Container Terminal through a 20-year project loan.

“For WCT 2, we got to extend the breakwater which we are hoping to do by 2028.So, we are hoping that WCT 2 might be ready in the next five years, Bernard said.

“The project will be tendered out. Even Adani has the option to participate in the tender,” he said.

The West Container Terminal is part of the Colombo South Port but on the west side.

When asked whether the concession agreement for the West Container Terminal gives a right to the existing operator to take up WCT 2, Bernard said:

“I don’t think so, not to my knowledge. It’s unlikely because normally we don’t do that. But Adani definitely has the opportunity to participate in the tender”.

The SLPA Chairman, though, indicated the possibility of giving the Adani-led consortium some mechanism such as a so-called right off first refusal to match the highest bid in the global tender and secure the WCT 2 contract.

“It’s possible there might be something like that,” he said.

The feasibility study – funded by the Asian Development Bank – for the Colombo North Port development have been completed.

“We are looking at it a bit more extensively. We hope to start that work also as soon as possible,” Bernard said, noting that the private sector will develop the facilities through a public-private-partnership (PPP) model. The North Port – almost like a new port – will have at least 4 terminals which will be awarded to different entities, he added.

Describing the Colombo North Port development as a “big plan which is at the conceptual stage”, Lal Weerasinghe, Additional Managing Director, SLPA told it will be a “totally private investment” driven project.

“It will be a multipurpose port. SLPA will only give the design and allocate certain areas for different types of cargo handling including bulk cargo and containers. It can even have a cruise berth,” Weerasinghe said on 17 October while on a visit to Mumbai to attend the Global Maritime India Summit organised by the Ministry of Ports, Shipping and Waterways.

“It’s a huge area, there can be warehousing and logistics centres within that area and it can be easily connected to the elevated highways and expressways to give easy access,” he said.

Weerasinghe declined to specify the investment involved for the Colombo North Port development. “It is yet to be finalised because the bigger part is to make the breakwater,” he said, adding that the SLPA has carried out a feasibility study and environment impact assessment for the project.

For building WCT 2 with three berths, the breakwater will have to be extended so that the northern breakwater area can be easily connected. “Without WCT 2, there is no point in building a North Port,” Weerasinghe said.

The 1,300 metres quay length East Container Terminal (ECT), a $475 million facility which is being built with the port authority funds, is expected to be completed by end of 2024 or mid of 2025 while Adani will complete the construction of the 1,400 metres quay length West Container Terminal fully by the end of 2025.

These two terminals will add 7.5 million TEUs of additional capacity to the Colombo Port, Weerasinghe added.

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