South on a development juggernaut
With the main impediment to progress and development — the terrorist threat — out of the way Sri Lanka’s focus is on the development of the country. It has been difficult for the government to showcase the dual track policy – the fight against terror and simultaneous development — it has advocated and in fact implemented over the last few years, due to the obvious focus of attention on its internal strife.
It has also been difficult to bring to the fore due to the political makeup with very small margins of majority in parliament but the wave of popular appeal on the back of the victory against terror and fear has meant that it is now possible to view the development work in clinical detail – without a pessimistic view that these are merely state propaganda. Nowhere is the development work more in focus than in Sri Lanka’s south.
Transaction
Soon after his election as President, Mahinda Rajapakse visited China and finalised a transaction which saw work start on Phase 1 of the Hambantota Port. A commercially-funded venture of the Government of Sri Lanka with China providing the financing and some of the technical expertise, gave life to a US$ 320 million project which will see completion in 2011. That is a full 10 months ahead of schedule – a rarity not only in Sri Lanka but in the region, where numerous obstacles including financial constraints brought about by the global financial crisis has conspired to stymie growth and development.
The Hambantota Port is set on 1750 hectares, with the completion of Phase 1 seeing the ability to handle three vessels simultaneously – on completion of Phase 3, the port will be able to handle 33 vessels at any one time. The largest vessel that will be accommodated will be 100,000 DWT, the port having a draught of 17 metres. Power will be supplied by the Ceylon Electricity Board, who have an interesting pilot project of a 3 MW wind turbine system. An US-funded project identified the Hambantota area as the ideal location for setting up wind turbines as an important source of renewable energy.
Activity
A team of more than 850 construction workers comprising of both Chinese and Sri Lankan personnel, helped create a hive of activity. Working round the clock, the team has managed to get ahead of the schedule and are on target to finish 10 months ahead of time.
Hambantota Port will see Sri Lanka escalating its efforts in terms of cargo movements and rejuvenating the bunkering industry. Lloyds of London confirms that over 350 vessels typically pass Hambantota on a daily basis – with Sri Lanka’s strategic location on one of the world’s most busiest sea routes, the operations at Hambantota Port is perhaps a maritime investor’s ideal.
The bunkering industry is looking at increasing the partial and farcial 220,000 metric tonnes of fuel supplied each year in Sri Lanka. The Sri Lanka Ports Authority is taking its cue from the megaport of Singapore, which is set to supply approximately 30 million metric tonnes of fuel in the current — depressed — year. With astute marketing and savvy commercial decisions industry experts estimate that the bunkering industry will be able to supply at least 800,000 metric tonnes in the first 12 months’ of the Hambantota Port operation.
The spend on this project by the government however will not result in attaining the stated objectives, if government departments continue to act in isolation of one another. For example, customs and excise regulations have a severe impact on the taxes that bunker operators have to pay. One of the impacts these short-termist policies have is that the price of bunker fuels in Sri Lanka is amongst the highest in the region.
This is one of the fundamental reasons we have seen the bunker industry in Sri Lanka languishing with a farcial supply of 230,000 metric tonnes of fuels on average per year. With just 4,000 vessels calling at Sri Lankan ports – mainly at Colombo – the average supply works out to a mere 50 metric tonnes per vessel. The average in Singapore is 250 metric tonnes – supplying on average 140,000 vessels each year.
Solutions
All government departments in the loop, led by the Treasury, should seek innovative solutions with a medium and long-term vision to develop the full potential of Sri Lanka’s strategic geographical location. The only other industry that has this same natural benefit – geographic location – is tourism. There are eight bunker license holders in Sri Lanka and instead of seeking fresh investment through strategic partnerships the Ports Ministry and the Petroleum Ministry would be better advised to support and encourage the local and existing businesses.
The strategies, methodologies and plans of the Ceylon Petroleum Corporation will also need to be redrawn – with a view towards achieving the objectives of fully liberalising the industry: in essence a “no holds barred” approach is of fundamental importance. Hambantota Port’s key revenue stream will not be fully met without a revision of government strategy which will need to be acting in concert rather than in isolation.
Red tape and bureaucracy are now the twin shackles that compromise and stymie the full potential available to the Sri Lanka Ports Authority. Pro-active administrators who understand and importantly, appreciate the full potential that awaits Sri Lanka in terms of its ports, should be encouraged to visit Singapore and follow examples set there to accelerate the potential at Hambantota Port. Failure to act incisively and swiftly will see Sri Lanka lag behind and lose ground to other regional ports – permanently.
We will then face the prospect of having yet another loss making venture adding to the Treasury’s woes when having to fund the repayments to China. There can be no room – and neither should there be a need - for protectionist policies if we are to see Hambantota Port amongst the leading regional ports.
Airport
The government plan to set up Sri Lanka’s second international airport is long overdue. With the country relying so heavily on air travel both for tourism as well as for its migrant labour force, the need for a second airport was sharply focused some years ago when the LTTE launched an attack at Katunayake and paralysed the island’s only international airport.
The proposal to locate Sri Lanka’s second airport in Uda Mattala, deep in the south is an ambitious and achievable target. The US$ 220 million project will see a 4,000 metre runway, capable of taking the Airbus A380 which should be in common use by 2013.
Anticipating approximately 46,000 aircraft movements in 2010 for Katunayake, from international movements solely, the government is confident that the second airport is a necessity in terms of the accelerated development programme it has for the Southern Province. ICAO the International Civil Aviation Organisation, estimates growth on average of 5% with the Asian region estimated to grow at around 8%
Renewable energy
A pilot project by the Ceylon Electricity Board, for a 3-MW wind turbine system has been in place for some years now. According to a US-funded report, the potential for wind turbine driven electricity exists best in Hambantota. The current pilot project is located within the new port area and discussions continue between the ministries to establish whether to relocate or co-exist.
Southern Expressway and roads
The Expressway from Colombo to Matara is an important aspect of the development of the Southern Province. The project has run into a storm recently and is expected to be complete in full by 2013. A number of anciliary approach and access roads have also been constructed and are already in use.
Entertainment Park
The government has recently allocated 500 acres for an entertainment park in Riddiagama. This will help boost visitors to the area as well as provide essential value additions for tourists.
Railway extension to Kataragama
The existing railway network which terminates in Matara, is to be expanded all the way to Kataragama. As the government seeks funding the railways authority has already mapped out the route and marker-stakes have been laid en-route. Some of the areas have herds of wild elephants, making the construction risky and bringing into focus environmental issues too.
Other projects
A Korean-funded conference centre and an international standard cricket stadium are also among the plans.
Source – Sunday Leader (Aug 23, 2009)