Little foreign interest in Colombo port - report

[TamilNet, Friday, 10 July 2009, 02:43 GMT]
China Merchants Holdings, which operates ports in mainland China, together with a top Sri Lankan conglomerate, Aitken Spence, were the sole bidders for a container terminal concession at Sri Lanka's Colombo port, press reports said this week. Hutchison Port Holdings (HPH), the world's leading port investor, developer and operator, said this week it had refused to bid because elements of its original bid in 2007 had been included in the Sri Lankan government’s second request for proposals this year, putting HPH at a disadvantage. Meanwhile, Colombo port’s future is reportedly threatened by India’s plans to develop Vizhinjam in the southern state of Kerala.

Hambantota Port work
Hambantota Port work
Norachcholai Power plant
Norachcholai Power plant
"HPH wants to clarify that we declined to submit a bid [for the Colombo terminal concession] after studying the contents of the revised Request for Proposal (RFP)," the Hong Kong-based company said in response to a query, Lanka Business Online (LBO) reported.

"Elements of our previous bid were incorporated into the new RFP, placing HPH at a competitive disadvantage."

HPH, Port of Singapore Authority, along with top Sri Lankan conglomerates, Aitken Spence, John Keells and Hayleys bid for the terminal concession the first time round in 2007.

However, the Sri Lanka Port Authority aborted the bid process last year and called for fresh proposals.

But in 2009, with a global shipping slump, there were few takers, despite several big names being amongst a dozen potential bidders taking away bid documents.

LBO cited officials as saying Aitken Spence, together with China Merchants Holdings, were the sole bidders, when tenders closed this week.

Meanwhile, India is looking to develop deep-water transshipment container terminal project at Vizhinjam in India’s southern state of Kerala.

It is widely believed that Vizhinjam could pose a challenge to Colombo Port, just 200 nautical miles away, as Colombo largely depends on trans-shipment cargo from the Subcontinent, the Journal of Commerce reported.

A Chinese consortium had won the initial contract to develop Vizhinjam in 2006, but the bid was eventually denied security clearance by the Indian authorities.

Mumbai-based Zoom Developers, the Chinese consortium’s local partners, are challenging the decision in the courts, the Journal of Commerce reported. The uncertainty had prompted Hyderabad-based Lanco Group, Zoom’s rival, to pull out last month, the report added.

Meanwhile, the Sri Lanka Ports Authority says it is planning to start operating its upcoming port in Hambantota, being developed by China, by November 2010.

However, the bunker terminal at the planned port would start with an initial capacity of 100,000 metric tonnes (mt) instead of the 500,000 mt initially announced by SLPA.

The first phase of the port in Hambantota, President Mahinda Rajapakse’s constituency, will cost 437 million dollars which 85% of it comes from China.

The Hambantota port is built by a joint venture between China Harbor Engineering and Syno Hydro Corporation, while the tank farm also been built by a Chinese firm, the Sri Lankan government said.

The China Exim bank gave $360 million to finance the first phase of the Hambantota port, Reuters reported.

Sri Lanka has planned a 3 phase development program for Hambantota Port, which. once completed, will be able to handle 20 million containers.

However the 2nd and the 3rd phase expansion will depend on the demand the new port receives, the government says.

Exim bank is also financing a 900 megawatt coal-fired coal power station in Puththa'lam.

The first phase, a 300 Mega Watt plant, is already being built by China's CMEC construction company.

China has offered $891 million as low-cost loan to build the second and third phases of the Nuraichchoalai plant.


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