Tuesday , 14 August 2018
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SLPA warns against too much competition in Colombo

As the tender process for Colombo’s East Container Terminal (ECT) enters its next phase, the Sri Lanka Ports Authority (SLPA) is concerned about excessive competition at the port.

China Merchants operates the only current deep water terminal in the port, while an APM Terminals (APMT)-backed consortium and the port authority itself run the other facilities.

At present, “the three terminals are competing and my view is that it is not a healthy situation,” SLPA chairman Dammika Ranatunga told the Sunday Observer.

“I believe we need to do a concerted marketing plan, putting our strengths together and get more volumes in,” he added.

The deadline for Expressions of Interest (EOIs) in the pre-qualification stage to build and operate the terminal was extended for the second time to September 22.

“We have had preliminary discussions,” Ranatunga stated. “I have spoken to the two CEOs. We should market the Colombo port as ‘one port’ and sell everyone’s strengths. We have deep draft terminals and a good feeder vessel network.”

He continued: “There’s enough business for everyone to grow. We are already a competitive and an established transhipment port. We need to let the world know who we are, together.”

“We do not want an investor to come in and take a share of the business we already have. When you develop a new terminal the tendency in the past was to take away some of the business the other terminals had.”

The Sri Lankan government has directed the SLPA to consider a strategic partner from the subcontinent who has more than a 20% share although this is not mandatory requirement to qualify at this stage.

“Judging by interest shown by key players in the field, there are very encouraging signs of stiff competition among them,” Ranatunga stated. “The majority, we believe, is from the subcontinent. Once they appoint a committee to proceed with the process, the committee will go through the requirements.”

Container throughput has grown by 11% at the South Asian transhipment hub in the first half of 2016.

With the Indian government planning significant port-related investment in its Sagarmala strategy, Ranatunga stated that Colombo was looking to broaden its market with regions including “Bangladesh, Myanmar, the East Coast of Africa, Pakistan and the Gulf.”

He also seemed to suggest that it would be difficult for Colombo to attract Indian cargo in the long term, adding: “It [India] has lot of potential to grow and every country prefers direct shipping for its export-import cargo. Indian ports should develop because the cargo should get in and out of India.”

Ranatunga further added that while Colombo’s capacity requirements would be met by its ongoing expansion, further developments are possible with North Port at a conceptual stage as a container port.

He also confirmed that the Public Utilities Commission of Sri Lanka is to become an independent port regulator of Sri Lanka’s state and private sector port terminals.