Colombo Port: A Game Changer for Sri Lanka-By Sulochana Ramiah Mohan
Source:Ceylontoday
The 184-hectare Colombo Port is the busiest port in the South Asian region and it is the instant revenue making body of Sri Lanka. The Sri Lanka Port Authority (SLPA) journeyed through several setbacks and challenges to grow up to what it is now – reaching to be one of the best ports, and in fact in 2017 reached the 13 rank in the global Best Connectivity rankings from the rank 18 and for this year the Sri Lanka Ports Authority won the GPF Awards for Port Authority of The Year and Port Infrastructure Development of the Year 2020 for the third consecutive year at the Global Port Forum Awards 2020 held at the Hyatt Regency Dubai Deira, in the United Arab Emirates.
The Port of Colombo was ranked as the world’s number one container growth port among the top 30 container ports for the year of 2018. With such growth, the Port of Colombo has leapt ahead many other Asian ports, major European ports and Dubai as well.
The Colombo Port has a unique demand as it is located strategically in the world map of maritime industry, hence it has also been caught up in geopolitics.
Situation in the Port
Despite the COVID-19 situation starting this year, the Port has faced many hardships but continues to operate fully.
But in the last two to three weeks, there was a shortage of port workers given that most of the workers report from the Gampaha District. Despite the situation being under control with transport arrangements in place, the last two weeks saw less port workers which had made vessels skip port and go elsewhere.
It’s obvious, when workers cannot turn up to work you lose revenue when things are not streamlined. Workers were reluctant to report to work, during Gampaha’s lockdown and when curfew was imposed in other areas. It is said that the machines and cranes, as well as the yard were short-staffed for two weeks despite special arrangements.
This resulted in ships staying longer in the berths and the next ship had to stay out of the harbour.
The labour force at the SLPA (all ports in the country) is around 9,000. The SAGT terminal has about 700 workers, around 18,000 in JCT and about 600 in CICT.
Due to recent setbacks, there had been delays in port operations and stays for vessel have been extended, costing dearly to the principals.
The handling of ships per month significantly impacted the revenue, an official said and added that the matter has been streamlined now with proper accommodation and care given to some of the workers who travel from afar.
The three terminal operators at the Port of Colombo; the Jaya Container Terminal (JCT) under SLPA, the South Asia Gateway Terminals (SAGT) and the Colombo International Container Terminals (CICT) early last year, reached a Memorandum of Understanding (MoU) to operate collectively to promote the Port of Colombo. Under the new collective agreement, it was expected to minimise the wait-time of all freighters outside port waters by allowing operations of vessels at the immediately vacant terminal. Further, through this agreement, terminals are also able to promote the Port of Colombo collectively and collaboratively in the arena of international maritime business.
The Colombo Port handled 80 per cent of transhipment cargo and in 2019, the port handled 7.2 million TUs of which six million were transhipment cargo.
Also there is a need to introduce the Port of Colombo to adopt a ‘regional hub’ port concept that include everything from upgraded systems to paperless work. As of now the SLPA is only halfway through with that concept. The berthing pattern, labour pattern, documentation, using new technology are yet to be executed. Singapore has the best concept from port entry to discharging consignments in a network with less input by workers. This concept is urgently needed at a time there is uncertainly prevailing with the COVID-19 where workers cannot report to work even if transport is supplied.
CICT Submits Cabinet Proposal
In order to develop the terminals the Chinese CM Port manages CICT- one of the two 18mt deep water terminals in the Port of Colombo. The CICT was award to Chinese CM Port on a 35-year lease with 15 per cent stake for SLPA in 2017.
The CICT is in a bid to enhance the terminal’s deep water capacity and currently can handle three million TUs a year.
The terminal is doing exceptionally well and has employed locals. Chinese Embassy says 99 per cent jobs at CICT are for Sri Lankans. CICT is the first and currently the only deep water terminal in South Asia equipped with facilities to handle the largest vessels afloat. Since its inception in 2014, the terminal has incrementally grown the volume it has handled; from 686,639 TUs in 2014 to 1.56 million TUs in 2015, 2 million TUs in 2016, 2.38 million TUs in 2017 and 2.68 million TUs in 2018.
The Government last week approved a Cabinet proposal to expand CICT with an investment of USD 90 million. The proposal explained that due to current demand and future business opportunities at the terminal it has been decided to expand the project by increasing the capacity of its yard without any construction.
The CICT’s full investment was at USD 500 million. Initially it was a USD 400 million investment with a local partner who pulled out from being a stakeholder and the Chinese were awarded it for USD500 million.
The project is expected to increase the productivity of the terminal by introducing new equipment, upgrading and modernising the existing equipment, and providing tax relief as per the provisions of the Strategic Development Projects Act.
Having given 85 per cent stake to the CM Port and 15 per cent for SLPA, a Cabinet approval for US 90 million has not been cleared by any of the officials at the SLPA and CICT. The implications behind the USD 90 million Cabinet proposal is that the funding should come from the Government or shouldn’t it? There is also Hambantota Port that is been given on similar facilities with 85 per cent stake to CM Port, but on 99-year lease. Do they also ask the Government for Cabinet approval for the expansion project? Does the SAGT run by a consortium also submit cabinet proposals for such expansion project requesting funds? There was no clear evidence why such practices are being carried out and Ceylon Today could not verify further details. The only concern is whether the tax payers should pay for such project expansion that has been fully undertaken by a foreign company.
One SLPA top official noted that Ceylon Today should verify with CICT. However, when contacted the CICT official noted that she is busy and would call with all the information.
The ECT has been commissioned
On 28 October, the SLPA serviced the first ship that entered the lonely ECT that was idling with three cranes that were purchased last year. The first vessel, MSC Emma sailed from the African continent to China, arriving at the ECT on that day. The only two terminals that has 18mt deep are the CICT and the ECT that is next to each other at the Colombo Port.
While 40 per cent of the terminal is completed using Government funds of Rs 10.8 billion, the ECT needed a joint venture to complete the rest. In order to ease the geopolitical tension the former Government signed a Memorandum of Cooperation (MoC) with India and Japan awarding a 55 per cent stake to Sri Lanka and the rest to India and Japan. That plan was not executed however, due to protest by port unions.
There were some political backing as well to avoid giving the ECT to international players and the Government was under pressure too. However, after several months SLPA noted it had incurred a massive loss due to delay in unloading gantry cranes which were brought from the JCT to the ECT. The cranes purchased from China were not unloaded as the ECT was allocated to India and Japan to run a joint venture with SLPA.
The huge protest staged by the unions saw that the crane was loaded at the ECT at the end but India questioned the Government about the crane being loaded at the ECT without them being informed. They also noted that the crane was small in size.
There is a demand for the terminal to be operational and ECT also can accommodate the world’s largest ships with at least two vessels and a small vessel at the same time. While just 400m in length with 800m to be built, the ECT can handle one big ship, and that was commissioned after the Government gave its approval.
“As the three cranes were ready and the terminal with 18ft depth is idling it is apt to execute operations to make revenue,” noted the official. He also said that due to the lack of a functioning terminal and high demand for vessel and consignments to berth at the Port, many vessels are forgoing Colombo or docking outside the Port when they are to be released as scheduled due to delays. It is still unclear whether India has let Sri Lanka manage ECT due to the COVID constraint where the latter can make use of the situation to generate revenue. There is no sign that the Government has given up on the matter to award ECT to India and Japan and whether the MoC could be withdrawn and let SLPA run it as it had been demanding to.
The Old Two Terminals
JCT and SAGT are both 14m deep and can handle small ships with some 10,000 TUs but it can be extended up to 13,000 capacity and currently services about 14 vessels per day.
