In an interview with Ceylon Today, Minister of Ports, Shipping and Aviation Nimal Siripala de Silva said Sri Lanka’s ports, like those in many developed countries, should be privatised.
He said because the Colombo Port is strategically located, the SLPA has created a demand for new ventures. “Port business is not just for expansion, but also to attract more vessels and businesses,” he said.
He added that the Trincomalee Harbour will be used for industrial purposes only and will be developed as a joint venture if necessary. “However, for terminal construction, we will solicit Expressions of Interest and assist investors,” he further said.
Following are excerpts:
The Government has massive development projects in all ports in the country. Can you elaborate on those?
A: There are five terminals at the Colombo Port. There are international companies managing the three terminals namely, Indian Adani Ports and Special Economic Zone Limited is constructing the West Container Terminal (WCT), John Keells handles South Asia Gateway Terminals, and the Chinese runs the Colombo International Container Terminal (CICT). We own 49% of Adani and about 15% stake in the remaining terminals. Sri Lanka Ports Authority (SLPA) owns 100% of the East Container Terminal (ECT) and the Jaya Terminal. As a result, there is income generation from all of these terminals.
Apart from that, the Colombo Port has lands inside the port which has been leased for various ventures and there is income generation from that too. Some of the lands are given on public-private partnerships. The port is running at a profit at present. But we have certain liabilities also.
What’s happening with the ECT now?
A: The ECT’s emphasis on 18 m deep berthing three mega ships is why everyone wants it. The SLPA, on the other hand, is developing the terminal with its own funds. So far, we have not taken out any loans. The SLPA is fully funding it. We have placed an order and paid USD 90 million for 12 gantry cranes, which will cost USD 270 million. That is an advance, and manufacturing will take approximately one year. Apart from that, Access Engineering PLC (AEL) has been awarded the contract to build the ECT in collaboration with its technical partner China Harbour Engineering (CHEC). They have begun the reclamation of land, stockpiling, dredging, and construction of barricades, among other things. The work is going according to schedule. By 2014-end the ECT will be completed and fully handed over to the SLPA. Even now, the ECT is operational. Once it is completed, we can take two big ships at a time.
On the Jaya Terminal, we have decided to increase the quay length. There is also some dredging going on inside the port to attract more ships to the harbour.
There is also a passenger terminal at the Jaya Terminal, but we haven’t had any passenger ships arrive in the last three or four years. However, several of them have recently arrived at the Colombo Port. As demand grows, we must also cater to passenger ships.
The elevated highway project in the Colombo Port is a massive project funded by an ADB soft loan. Furthermore, the majority of administrative offices and other departments are dispersed throughout the port. We’re building an eight-story complex with an ADB loan to house all of the offices in that building. Work on the elevated highway has begun, and the complex will also be completed.
But all these implementations are not enough. We need to attract more investment to the port and need more bunkering facilities. The refuelling brings good revenue to the country. But our price of fuel must be competitive with the regional players like Bangladesh, the Maldives, India, Singapore etc.
Did the Adani Group, in their MoU, request the SLPA not to offer the ECT to a third party?
A: We did not give that assurance. We have not given any assurance that we will not give to anyone either. At present, we have not decided anything. We are not in the process of developing the ECT.
Will that be offered to someone in the future?
A: I cannot comment on the future.
How many tanks do we have for refuelling and bunkering?
A: We presently have three fuel tanks for approximately 35,000 MT and are planning to add two large bunkering tanks. We will lease the tanks to the eight fuel bringing companies, who will earn revenue from them. Bunkering is extremely popular. Our port is strategically and geographically significant on the world map. However, this alone will not attract ships. Our port must also be reliable. The majority of the world’s ports have been privatised. Our port has only recently caught up due to government and private sector involvement and is sending mixed signals. India’s ports have been privatised.
Where do we earn good revenue in the port sector?
A: It comes from transshipment. It was not previously present. Goods arrived solely for our consumption and export and the ships returned to their original destinations. The new business is transshipment, and the maritime concept has changed.
Transshipment occurs when a large ship arrives in a port halfway unloaded and small ships transport them to their final destination. Large ships don’t go to those countries. We now handle approximately 7.5 million TEU for transshipment per month. As demand grows, this must increase. With the new terminals coming up, we want to add up another 1.5 million TEU transshipment to be handled in the Colombo Port. We need to keep expanding the port handling business, but how?
Having said that, we are still very primitive in maritime management of the port.
You mean not being digitally ready to accept port trading?
A: Yes. We’re still looking for a clearing agent. He must visit Sri Lanka Customs. He has to go to the Import Control Department on occasion, and a customer has to deal with 22 departments and offices to clear his goods, which is a lot of paperwork. There is no paperwork involved in the majority of developed ports worldwide. They can manage the entire process of clearing their goods from their office. New legislation should be enacted in this regard. If only one person goes, he must abide by the age-old Customs Ordinance.
Wasn’t paperless ports talked about three years ago? Why is there a delay?
A: That is correct, and it is not fully implemented. The ADB and the World Bank have also assisted us in developing a port management system similar to that found in the Rotterdam Port for this project. These funders met with all port stakeholders to determine our deficiencies, areas for improvement, and so on. However, in order for this to occur, we must also change our legislation. We are presently working on a legislation process to accommodate paperless work, and meanwhile, we request an EoI in two to three months to fix this port management system.
What is the function of the port management system?
A: When it comes into operation, it is basically paperless documentation. No one will have to meet anyone at the port in the quarantine section etc. Only when you meet people there is corruption and underhand operations, which will be eliminated under this system.
On the new legislation, of the Customs Ordinance, what are you going to do?
A: It is so antiquated and over 100 years old. It is only good for the Customs Officers and not for the public. For instance, they detain the goods and there are goods languishing in the port for over 20 years. This is mainly because the process is so long and tedious. Some give up and go and they are stored for many years.
Can’t Customs do something with these goods?
A: This is also a long and ancient process. I brought this to the Cabinet’s attention. The President formed a Cabinet Subcommittee to investigate this matter. I co-chair that subcommittee with four other Ministers. Based on feedback from all stakeholders, we intend to propose certain necessary amendments to the Customs Ordinance. For example, at present, if a customer is an income tax payer, the Tax Department will assess him, but if the customer is dissatisfied with the tax assessment, he will have access to a Tax Appeal Board. If he is not satisfied with the Appeal Board, he is compelled to go to another Customs Officer or the Director General of the Port. If you do not take the goods with the assessed tax payment, Customs assesses and sells them and they receive 60% as a reward. This does not allow a speedy process and facilitate fair play.
What is the new amendments you are trying to bring to the Customs Ordinance?
A: The amendments would require that if a Customs Officer detains a consignment, the investigation be completed within three months. If they do not complete the investigation within that time frame, the consignee has the right to take the goods out while providing a bank guarantee. Other thing is, Customs will have an Appeal Board like the Tax Appeal Board where you can appeal while depositing the value of the goods and take it out first. If the inquiry is held and an order is given where the customer goes to the Supreme Court and Court of Appeal etc., the money will be there, and whoever wins the case will receive the deposit. There are Court cases and goods that have been held for 20 years. In order to speed up the litigation process, these are a key to be implemented.
What are the detained items at the port for over 20 years?
A: There are plenty of good such as ethanol, liquor, vehicles, vehicle parts, areca nut, flour, several consumable items. Detained items can be solved by the Customs only after the final inquiry, which takes over two decades sometimes.
What about the KKS Harbour in the North?
A: We plan to use passenger vessels to connect India and Sri Lanka, and we have invested more than Rs 100 million in this venture. We are presently constructing a passenger terminal, which will be completed by 15 April. This passenger terminal can accommodate 300 to 400 people travelling to India. We’re looking for licensed businesses to run the ferry service. Their credentials will be scrutinised.
Did you call for an EoI?
A: We did, indeed. Five parties submitted Expressions of Interest. We stated that anyone could join us. However, they should begin soon. The SLPA will profit from the Port fees. There will also be a Customs clearance desk.
Is it true that a one-way sea journey would cost USD 50?
A: That price has been determined by the ferry companies. There will be competition if they get two parties. Prices may vary depending on the services provided by the ferry operators.
Has the Indian Government cleared it?
A: They must grant permission for this ferry service between KKS and Karaikkal in Puducherry, Tamil Nadu, to use their port. We have cleared our side, and the infrastructure is already complete. We are awaiting a response from the Indian Government on this. There are many procedures in India, including concerning their security.
Can you start the ferry services by 25 April?
A: We hope so, but it is on the cards.
What about a ferry service from Talaimannar to Dhanushkody?
A: An Indian investor has proposed bringing a vessel from Dhanushkody. That investor is prepared to build the Talaimannar Pier. The present one is in disrepair. We met the Sri Lanka Navy, the Talaimannar Pradeshiya Sabha Chairman, the Indian High Commissioner, and the Railway Department. The investor was also present. I proposed running a luxury train from Colombo to Mannar to transport passengers. They will travel by ferry from Mannar to Dhanushkody.
Has the Indian Government agreed to this?
A: They have agreed in principle, but there are some rules to follow. They also have to conform to strict security measures. However, our Customs and Immigration services are ready for action. The International Organization for Migration confirmed to me that they will provide us with Customs scanners at Immigration counters as well as e-gate systems. This also applies to the KKS Port.
Elaborate on the Trincomalee Harbour development project?
A: This harbour has been pinpointed as an industrial harbour for oil, flour, coal, etc.
Isn’t the Trincomalee Port doing well already?
A: It was running at a loss and now it’s picking up. The SLPA fully owns it.
What’s the profit you received say, annually?
A: We get about Rs 400 to 500 million annually, but that is not enough and we need to expand it.
Is there any plan of the Government to award the Trincomalee Port operations to the Japanese?
A: Not at all. They gave us the night vision facility. The Japanese provided USD 1 million worth equipment and that event took place at the Trincomalee Harbour.
But doesn’t the Government plan to give the Trincomalee Port to an international investor?
A: We can give, but somebody should come forward.
Did you call for an EoI for development of Trincomalee Harbour?
A: Yes. But there is a problem as there is the oil farm built by the British. The Indians joining the IOC have an ambitious idea to develop those oil tanks. There is also some call for Ilmenite value addition product manufacturing. That would be evaluated by the Board of Investment also. Once that is cleared, we will lease land of the harbour.
Who is the investor for Ilmenite export?
A: Not yet selected.
What about the harbour itself? When are you calling for an EoI for the Trincomalee Harbour?
A: We have not called for an EoI for the harbour. The harbour will not be given to anyone. It is strategically located. What we said was, any investor can come to give the land areas and we will facilitate. We have officially declared this.
Aren’t you calling for a joint venture to develop the Trincomalee Harbour?
A: No.
Did the US Government ask for the Trincomalee Harbour?
A: No, they did not. We won’t even give the harbour to the Indians and Chinese. But we can consider a joint venture in the future. If they want to set up a terminal like in the Colombo Port, then we are happy to join. But the navigation control will be with us out of national security concerns.
Any idea what is happening in the Port City?
A: It does not come under my purview. It comes under the Finance Ministry.
Can you tell us the annual revenue the SLPA gets from the Hambantota Port?
A: It’s a very small amount. I don’t know the exact amount.
Isn’t the Government still paying the Hambantota Port initial development project loan? How much do they owe?
The payment is not by the SLPA, but the Treasury. I don’t know whether they are paying or liquidated the loan.
(amiesulo@gmail.com)
By Sulochana Ramiah Mohan
