Lanka to call fresh bids for new port

Colombo: Sri Lanka will call fresh bids for a planned new container terminal in Colombo and is going ahead with a contract to build its breakwater, a senior port official said. A cabinet appointed negotiating committee that handled the planned new deep-draft port had recommended the cancellation of the original bids, Sri Lanka Ports Authority (SLPA) chairman Saliya Wickramasuriya said.

This was because the committee could not make a clear recommendation without compromising either the request for proposals of the project or a government directive last month on 'securing national interest' in major projects, he said.

A consortium led by Port of Singapore Authority (PSA Corp), in which the local Aitken Spence conglomerate has a majority stake, emerged the winner in the bidding round, with Hutchison Port Holdings (HPH) of Hong Kong coming second, according to a ranking.

Local news reports said the cabinet committee was divided in its opinion on awarding the terminal contract to PSA Corp with Wickramasuriya maintaining that the offer by HPH was a better deal.

The cancellation would give at least two listed firms, John Keells Holdings and Hayley another chance to win the terminal deal.

The project has become a major controversy in the island amid fears that further delays could endanger Colombo port's position as south Asia's container transhipment hub.

PSA Corp and HPH are the world's top port operators and both are eyeing the booming Indian container cargo volumes, some of which is transhipped through Colombo.

Colombo is trying to entrench its position as the transhipment hub for Indian cargo with the planned new port.

A lot of Indian transhipment cargo goes through Singapore as well as Dubai.
Plans to build the new Colombo south port, as it is called, have already been delayed by several years but Wickramasuriya said the decision to call for fresh bids for the container terminal project would not jeopardise the project.

'This delay will not prejudice the project in any way because construction work has started,' he told LBO.

South Korea's Hyundai won the contract to build the breakwater and do the dredging for the new port, which is to come up next to the existing one.
Work on the container terminal, for which bids have now been cancelled, can only start after completion of the breakwater which is expected to take 15 months.

The Asian Development Bank has given a loan of 300 million dollars for the infrastructure work but disbursement was conditional on the government awarding the container terminal deal in a fair and transparent manner.

The government has held talks with a team of ADB officials who visited Colombo on relaxing the condition to enable the breakwater project to go ahead.

'Discussions between the Asian Development Bank and the government have been positive with the ADB recognising the importance and urgency of the project,' Wickramasuriya said.

'With this in mind, the government has confirmed its commitment to the breakwater construction contract and dredging work has already started.'

A decision by the ADB's executive board in Manila on the loan conditions is expected shortly.
A team of 17 Korean experts has been in the island for the last two months.

Industry officials said the decision to call for fresh bids would enable the original bidders to submit fresh proposals as well as possibly give time for other major port operators to bid as well.

AP Moller-Maersk, the world's top shipping line, was not among the original bidders, and had reportedly asked for more time when bids were called last year.
The other major port operator which did not bid was Dubai Ports World, which is making huge investments in ports on the Indian sub-continent.