Port cannot be run with island mentality – Dr. Jayamanna

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By Sulochana Ramiah Mohan

Chairman of the Sri Lanka Ports Authority (SLPA), Dr. Prasantha Jayamanna, has a vision for the SLPA and is in the process of completing numerous projects despite the economic crisis, with the goal of making the Port of Colombo (PoC) a regional maritime hub. He has made roughly 15 proposals, with some of them receiving Cabinet approval. 

In an interview with Ceylon Today, he said maintaining a port is an international business that cannot be pursued with an island mentality. He also said the investigation into the Finance Director is ongoing and refuted allegations that the SLPA’s profits were artificially inflated for the year 2021, as rumoured to her compulsory leave.

Following are excerpts: 

The Government wishes to establish Port of Colombo (PoC) as the maritime hub of South Asia. Do we have a long way to go?

A: In reality, we’re getting closer to becoming the centre. From the moment that then President Mahinda Rajapaksa chose to construct the Southern breakwater at the PoC, the port sector has set numerous milestones. Without the breakwater, South Asia Gateway Terminals (SAGT) and Jaya Container Terminal (JCT) would be the only terminals operating today. With the ADB’s help, we were able to have Colombo International Container Terminals (CICT), the first public-private partnership terminal, built in 2011. It was initially intended to be similar to the SAGT, but the terminal plans moved one step ahead and began working on the operations of CICT in 2011. 

This breakwater was supposed to contain the three terminals: the CICT, the West Container Terminal (WCT), and the East Container Terminal (ECT). Originally, the ECT was to proceed as an SLPA owned one, with the CICT as a joint venture and WCT as a BOT operation. The breakwater project stated in the loan agreement with the ADB that two terminals should be built as a Public-Private Partnership (P to P). At the time, the objective was to create a capacity for TEUs ranging from 9 to 11 million from all three terminals. That goal alone set us on the path to becoming South Asia’s hub.

The State owns the JCT, whereas John Keells Holdings and other stakeholders run the SAGT. We thought about how to bring more investments into the ECT and WCT. While the CICT was being created, the SLPA began to use their own finances to build the ECT. It was partially constructed. However, nothing happened from 2015 onwards. The cranes for the terminal were ordered in 2014, but the order was later cancelled, and no new developments using the P to P were made until 2019.

The only thing that happened was the Hambantota Port was awarded a 99-year lease, and the ECT was put to an unwelcome power struggle by signing two separate MoUs between Japan, India, and Sri Lanka for development. We are looking at additional 7.5 million TEUs of capacity with WCT and ECT. We currently have 7.2 million capacity in the PoC. We are ranked 22 out of the world’s ports and aspire to go up to 13th place and be among the top 50 ports in the world within the next three years, eventually being the number one port in South Asia and a big player in Asia. The WCT will be operational by 2025, and we can be the hub.   

This problem was already there when this government came to power, and the Government was forced to cancel the deal. When one Head of State does one thing and the other Head of Government changes the agreement, the image is tarnished in the world arena, which this government did not want. This Government wanted to honour the agreement, but in his Election Manifesto, President Gotabaya Rajapaksa stated that the ECT would be developed by the SLPA and the WCT would be developed by the P to P, and he managed to convince India and Japan to use the WCT while allowing the SLPA to develop the ECT.

Our next objective was to figure out how to build WCT on an instantaneous basis with BOT, and for the first time, a US$ 650 million investment was completed within an 8-month period, and it is known as Colombo West International Terminal (CWIT). They have already begun basic work. Dredging work, on the other hand, began on the ECT on 12 January. It is entirely sponsored by the SLPA, and we will take out some loans to supplement our financial flow. We have adequate cash, but we need a loan.

What is the loan amount required to complete the ECT?

A: We have requested Expressions of Interest to get the financing, however, we are not in a hurry.

Has the work begun?

A: So far, the SLPA monies have been used.

How much is the investment for ECT?

A: It would cost roughly US$ 550 million, and the filling process has begun, as have placed the orders for the equipment. We’ll need another year and a half to get the equipment.

So, the sum of US$ 550 million is completely funded by the SLPA for ECT?

A: The SLPA will bear a portion of the costs, and we are looking for a loan. Whoever wins the bid will join us. We have sufficient funds, and at the outset of the project, Cabinet Ministers proposed that we seek a possible loan from an international lender to protect the outflow of funds. We’re going to do it.

What is there to complete at the ECT?

A: The breakwater is already in place. Civil construction must take place. The equipment will have to be delivered.

What is the roadmap on giving the WCT to India? What do you expect from a joint venture?

A: The port industry is a global one. Adani from India will bring a wealth of knowledge and connections. They handle 40 per cent of the containers, and we anticipate that they will bring greater volumes to Sri Lanka. India will gain from its geographical location as well. Adani Group controls the majority of India’s ports. By 2025, the WCT will be launched in stages. Also, by June 2024, ECT will be ready.

Why was the SLPA’s Finance Director dismissed? According to reports, she was ousted because she refused to project an artificial annual profit of the SLPA, and there is also roughly Rs 3 billion in arrears by shipping agents. Could you please elaborate?

A: There is an investigation underway, and it is inappropriate to discuss the topic. It is an internal matter of the SLPA. Our financial matters are audited by the Auditor General, internal auditors, external auditors, and everyone is held accountable. She has worked for SLPA and how can there be Rs 3 billion in debt? There are continuous business transactions with our good customers. PoC cannot have an island mentality. 

We welcome visitors from all over the world. They are here doing business and negotiating contracts with all of the major shipping companies. They are mostly concerned with international trade. Whoever does not grasp the context takes things out and portrays them in a negative light. We have a very strict financial control system in place.

SLPA Chairmen have always been political appointees, and you are the third Chairman in two years. How can we forecast growth in the port industry when policies also change?

A: The first Chairman I worked with was General Daya Ratnayake, who is an accomplished military officer. He managed to curtail the spread of Covid-19 in the Port.

Then why was he removed?

A: He was a senior person in the rank and the generals are holding secretary positions and not chairmanships and we have only few generals in this country.

In that case, why was he appointed?

A: I can’t comment on this.  What I feel is he deserved something better.  That must be the reason why he was appointed as the Secretary to a Ministry. 

Now all that you dream to do may be subject to changes when you are removed or transferred and the Port would eventually suffer. Can that happen?

A: The SLPA is led by a competent executive and officers, as well as a management team that is aware of the master plans. All of the chairmen have contributed. But, since the times are shifting to various horizons and ways of doing things, shouldn’t we take a look at what varied talents bring to the table? The Port’s policies are quite consistent. They are carrying out the policies. When I was Vice Chairman, I pushed for WCT and the ECT to come in, and I pushed for discussions and the removal of unwelcome impediments.

I worked as a negotiator with the private sector and with the bureaucracy to bring everything back into line. Multiple Cabinet Papers were presented for clearance to implement, indicating that we already had our goals and core framework in place.

A consignment is held up at the Port of Colombo due to lack of foreign exchange in Sri Lanka, the SLPA website says. Could you explain?

A: We are collaborating closely with the Presidential Secretariat, the Finance Minister, and Customs. There is no demurrage for the first seven days on any shipment that arrives. They are clearing it based on their financial capacity, otherwise they will have to pay demurrage. We’ve gone through the number of containers that leave each day, and I don’t detect a significant difference.

Imports rose in 2020. In 2020, imports were at US$ 22 billion. There are minor delays from time to time. It’s all part of the game. Because importers have foreign currency, they swiftly withdraw their consignments, but there are some problems for local importers. My understanding is that they are all collaborating with the Finance Ministry, CBSL, and several other banks to settle the issue as soon as possible. Positive numbers of consignments are moving out, and there are no big volumes that are stuck.

How many consignments are stranded at each terminal? Are they there because of new government laws, because they were detained by Customs, or because the importers abandoned the containers?  

A: Whatever comes in goes out eventually and there may be delays at times.

So, there are no containers that are not moving out in the Port these days?

A: We have, but it’s an ongoing thing. Obviously, Customs-detained containers will be there if there is something illegal.

Do you have statistics?

A: We can get it for you. These are not static numbers, these are transshipments.

What about garbage? 

A: I am not aware of this. I don’t believe waste cargo entered PoC, but it did arrive with a specific consignee. They will use the Port of Colombo to ship them away once they have decided to do so. As far as I know, if it’s going via the PoC it would immediately be sent out.

What is the solution as the regulator to the direct billing demand by the common feeders?

A: We’ve formed a committee to study the request tabled by the Non-Vessel-Operating Common Carrier. We contacted the Ports Ministry. According to our recommendation, the Ministry has formed a committee comprising all stakeholders, including SLPA Finance, the SLPA’s Managing Director, as well as CICT and SAGT terminals, to discuss how we can accommodate their request and the legalities involved, such as who will bear responsibility in the event of a fire, and so on. The SLPA features a secure regulatory aspect and an appropriate transparent procedure in handling the container. When something goes wrong, someone should be held responsible. Everything is discussed.

What are the plans to retain the SAGT. Who is going to run it?

A: It’s run by JKH and a consortium of stakeholders.

Are there Taiwanese engaged too?

A: Number one shipping lines own shares of SAGT. They are running well and highly efficient. World-class shipping lines are part of SAGT from 1999.

Is the port investor-friendly? There are severe constraints in doing business, many say?

A: We are working on a Port Community System at the moment with ADB consultants. KPMG and Port of Rotterdam are our consultants. By August this year, consultations will conclude. Then, we will be going for a Request for Proposal (RFP) calling and then the tender process. All issues related to doing will rest and easy doing business will start. We will fast-track it beginning next year. There will be digital initiatives too.

What are the 15 Cabinet proposals you have in hand now for the SLPA?

A: We have on the ECT, the WCT, modernisation of the warehouses, the logistics centres, developing Galle Port as a tourist port, developing Trincomalee Port as an industrial port, using underutilised land for mixed development projects, and disaster recovery are in the proposals. 

(Pic By Sulochana Ramiah Mohan)

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