Financing Agreement for Colombo South Port signed

The China Merchant Harbour International (CMHI), and China Development Bank have signed a financing agreement for US$ 350 million for the Sri Lanka Colombo Port expansion project in Shenzhen, China recently. It marks the final financing agreement reached by CMHI for its first overseas Built Own Transfer (BOT) project.

The China Merchant Harbour International plans a total investment of about US$ 500 million. A total US$ 350 million loan will provide full financial support for the project to complete the construction on schedule and be put into operation steadily.

The agreements to construct the South Container Terminal of the Colombo Port Expansion Project were signed among Sri Lanka Ports Authority, China Merchants Holding (International) Company Limited, Aitken Spence PLC and Colombo International Container Terminals Ltd, in Colombo on 9th November last year, following the signing of the BOT Agreement for the first terminal on 12th August 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 the President Mahinda Rajapaksa’s State visit to China to attend the opening ceremony of the 26th Universiade Shenzhen 2011.

The construction work of the South Container Terminal has already commenced and the first 600 meter of the South Container Terminal is expected to be in operation in early 2014. The container handling capacity of the South Container Terminal is estimated as 2.4 million TEUs and the entire terminal will be completed in 2016. The project cost of the SCT is estimated as US$ 500 million.

The port will be developed in three stages and each container terminal will add another 2.4 m TEUs enhancing the total capacity up to 13.0 m TEUs from the existing 4.5 m TEUs at present.
The expansion of the Port of Colombo has been identified by the Government as the flagship development endeavor in the current decade, targeted at giving Colombo a competitive edge over other regional ports.

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 construction of the breakwater, and the second stage involves the construction of the South Container Terminal for which the agreements have already been signed with Chinese companies.
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.

China Merchants Holdings (International) Co. Ltd. (CMHI) provides shareholder 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 early 2014 as the first phase and the entire terminal of 1200 m in length will be completed in 2016 as the second phase. 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, making Colombo the mega shipping hub in South Asia.(niz)