The gateway of the the world’s busiest international shipping lane

A US$ 500 million Colombo International Container Terminal  (CICT) in Colombo South Harbour is inaugurated today by the President Mahinda Rajapaksa. CICT will be the first terminal to come on stream in the Colombo South Harbour Expansion Project. The construction is scheduled to be completed in three stages with the first stage is going into operation now, and full completion planned for April 2014.  The new terminals give a vital foothold on the world’s busiest international shipping lane as it seeks to secure maritime supply routes. This massive terminal in Colombo is located mid-way on the lucrative east-west sea route and has facilities on a par with Singapore and Dubai.

New Colombo International Container Terminal is going into operation 

CICT is a joint venture Company between China Merchants Holdings (International) Co., Ltd. (CMHI), a listed blue chip Company in the Hong Kong stock exchange, and the Sri Lanka Ports Authority (SLPA). It is developing the 2.4 million teus capacity Colombo South Container Terminal in the Port of Colombo, under a 35 year build, operate, and transfer agreement with the SLPA. 85 percent  of CICT  is owned by  CMHI and new terminal is designed to handle mega ships — a first for Sri Lanka which is aiming to become the region’s shipping hub.  

With an envisaged investment of US$ 500 million, including the installation of the latest state of the art terminal equipment, it is so far the single largest foreign direct investment in Sri Lanka by a private entity. The Port of Colombo with a current capacity of over 4 million teus, has embarked on a large infrastructure development programme to increase the total capacity of the Port of Colombo by another 7.2 million teus in three separate phases. The Colombo South Harbour Development which consists of three independent dedicated container terminals will create this additional capacity in three different phases of 2.4 million teus in each phase.

The new terminal made economic sense for China to tap in to the growing South Asian container cargo and gave Beijing a foothold along a strategic sea route. Chinese involvement  in Colombo is a strategic commercial investment. The Chinese investment in Sri Lanka, which is under pressure from Western powers and India over its human rights record, has raised fears in New Delhi about Beijing’s influence in the neighbourhood.  Shippers in India could save up to four days by routing their cargo through Sri Lanka rather than using Singapore or Dubai.  India is about five to six years behind Sri Lanka when it comes to port infrastructure. Sri Lanka has been an important stop in the ancient Silk Sea Route and today hundreds of ships pass its southern coast daily while plying the world’s busiest international shipping lane.

With a capacity of over 18,000 containers, the M.V. Maersk Mc-Kinney Moller, which was commissioned about two weeks ago is expected to make up a fleet of 20 mega ships in the next two years plying the East-West route. The SLPA is pouring millions of dollars into infrastructure around the island and   it is on course to increase container handling capacity by 1.6 million containers to 6.4 million by April. It hopes to have a container capacity of 10 million by 2020, while revenue is forecast to triple to one billion dollars by 2020.

Hambantota, which is just 12 kilometres (7.5 miles) away from the East-West sea lane, is being promoted as a key service centre and industrial port where large ships can re-fuel or take on fresh food. In April, Colombo’s port is due to open another mega terminal just next to the Chinese-managed CICT. The new addition will initially be able to handle about 800,000 containers a year, according to the SLPA.  Chinese loans and expertise were also instrumental in the construction of a new $450 million deep-sea port at the southern Sri Lankan city of Hambantota which opened in June 2012. 

The artificial island will boost tourism industry in Sri Lanka

 A similar type of island to be built in Hambantota

Sri Lanka Ports Authority is planning to  create an artificial island for the first time near the Hambantota Port to be used for tourist activities and boost tourism industry in Sri Lanka.  The historic project would be undertaken by Sri Lankan Engineers attached to the Ports Authority.  The feasibility studies in this regard have been done and the Ports Authority is awaiting the final clearance from the government. Ports Authority officials said that they are looking at creating an island of minimum five acres.

The project is funded by the China Exim Bank and the contractor will be executed by the China Harbour Engineering Company. Around 40,000 cubic meters has to be dredged under the second stage of the Hambantota Harbour project and this dredged earth would be used to fill this proposed island. Ports Authority officials said that when completed this land would be leased out and international tenders will be called for development activities after the completion of the island.

Meanwhile, Sri Lankan authorities expect to triple revenue to US$ three billion by 2016, with a target of attracting 2.5 million high spending tourists by that year.  Four years after the conclusion of the bloody 30-year civil war, tourism has become one of Sri Lanka's highest foreign exchange-earners with average annual revenue of US$ one billion at present. The number of tourist arrivals last year was 1,005,605 while, in January this year 97,411 tourists visited the country.  Sri Lanka has set a target of 22,500 rooms in the next five years and aims to turn the entire country into a tourism development zone.

Dicyanamide with imported milk powder, no action to ban - GMOA

Dicyanamide contaminated milk could causes serious health issues

The Industrial Technology Institute (ITI) of Sri Lanka, which tested samples of imported milk powder, had detected Dicyanamide (DCD) in all of them, but the Health authorities had not taken any action to ban those products, CeyNews reported. But no traces of DCD were detected in local brands of milk that were tested for DCD by ITI.  Many laboratory tests on samples of milk products taken from the market have been officially conducted by ITI  and detected that a harmful substance called Dicyanmide was present in all imported milk products. 

The Government Medical Officers’ Association (GMOA) had decided to bring the issue to the attention of the minister of health Minister Maithripala Sirisena and ask him to ban the imported milk products as the companies had been doing so for a long time. Dicyanamide was mixed with grass to feed the cows to enhance their milk output.   The GMOA would request the Criminal Investigation Department (CID) to find the person in the Health Ministry who had  made a statement to the media that the imported milk powder sold in the local market was safe though the laboratory investigation conducted by the ITC had revealed that the imported products contained Dicyanamide

It had been scientifically proved that Dicyanamide could cause nervous, respiratory and kidney complications and the milk product importers had done more harm than good to Sri Lanka, GMOA  Assistant Secretary Dr. Ariyaratne said. He warned that Sri Lankan children might develop a variety of health complications unless the harmful imported milk products were banned. It was a shame that a person in the Health Ministry had made a statement to the media that he had received a report issued by the Thai government that the imported milk products sold in Sri Lanka did not cause any harm to humans. It was evident that multinational companies had greased the palms of health ministry high officials to propagate misinformation, Dr. Ariyaratne told.

GMOA Media Secretary Dr. Navin de Soysa said that Health Minister Maithripala Sirisena, who claimed to be a campaigner against fraud, corruption and malpractices was silent on the issue. Dr. Navin de Soysa said that his organisation would ask Health Minister Sirisena to ban imported milk powder and ask the multinational milk product companies to pay compensation to the people and children who consumed their products. It is high time action was taken to protect the children and the people of Sri Lanka and deafening silence on the part of health authorities and Heath Minister was puzzling," Dr. Soysa emphasized. 

Sri Lanka Ports Authority targets US$ one billion by 2020

The Sri Lanka Ports Authority (SLPA) targets its revenue of US$ one billion, more than 20 million tonnage of cargo, and investments of US$ 10 billion in the country’s ports by 2020 to become a centre of maritime excellence in the region and the leading contributor to the national economy. To achieve the ambitious goals set out in the ‘SLPA Vision 2020’ the authority plans to develop infrastructure and super structure facilities in Colombo to consolidate its position as the centre of maritime excellence, sector specific marketing and business development programmes, develop the Hambantota port as the international service and industrial container handling port, and develop regional ports as per their strengths and competitive advantages.

SLPA becomes the financial heart of the nation 

The SLPA has also laid down plans for organization restructuring and re designing of administrative procedures, implementation of a new advanced financial management system, enhance safety and security for cargo and port users. The three year plan which later changed into a five year action plan, taking to account the global economic turmoil prevailing at that time, would seek to improve Sri Lanka’s port operations in a highly competitive regional logistics environment. More than 95 percent of the World’s merchandize cargo was transported by sea and Sri Lanka needed to seize the potential. Besides its primary focus, the new corporate plan also includes diversification of business activities, provisions of facilities for oil and gas, efficient vessel oriental services and Corporate Social Responsibilities.

Envisioning the future of Sri Lankan ports, SLPA is shifting its original thought of container hub to global logistics hub, expecting the boom in International trade that opens up a range of opportunities and challenges. SLPA accordingly, in its port vision to be the logistics excellence in the Silk Route expects to strengthen complex logistic approaches with 'one touch' information flow of all activities while sustaining the best practices at national and international level in order to improve overall economic conditions in Sri Lanka. Ports and Airports will be the key nodes linking the global supply chain and the logistics services

Therefore, in Sri Lanka ports and airports will play a significant role in connecting the region to support the transshipment and value addition activities to connect South Asia to the rest of the world. The geographic location gives a comparative advantage to the country to be the gate way to Indian Subcontinent and to serve South and East Asia, Middle East and Africa on the main East West shipping route. Ports play a significant facilitating role for the domestic cargo base of Sri Lanka. The positioning of the ports gives greater connectivity to local manufacturing sector to both export finish goods and to import raw material for production at competitive prices. To be in the forefront of competition, improving handling and logistics cost will give the country an added advantage. Vision 2020, the corporate plan of  SLPA was launched at a ceremonial function held at the Hilton Hotel in Colombo this week.

Sri Lanka is getting ready to battle against the power crisis

Kerawalapitiya Thermal Power Plant and Solar Power Generation in Hambanthota  

The power crisis is a major issue in the world especially in Third World countries. Alternative power generation is not an easy task for poorer countries due to the lack of technology and finance. Several Western countries have shifted from hydro to alternative power generation while Third World countries still depend on hydro power. Drafting a common mechanism to overcome the crisis is vital to address the power crisis. In addition to hydro power generation certain countries have focused on coal, wind and thermal power generation.

In the wake of averting a power crisis, Sri Lanka has also undertaken alternative power generation in addition to hydro power generation. The Norochcholai Lakvijaya coal power plant, the Puttalam wind power plant and the Kerawalapitiya Yugadanavi Thermal power plant assists national power generation considerably. Meanwhile, the Government has implemented several major and small hydro power projects at suitable locations. The Upper Kotmale project takes significance. The Puttalam district is an appropriate location for wind power generation. The wind power plants in the Puttalam district adds 50 MW of electricity to the national grid alone, Wind Post Private Limited has invested Rs. 4,000 million on the project.

Wind power plants have been set up in locations where the wind velocity is high. These areas receive less rainfall compared to other parts of the country. Rainfall accompanied by wind in these areas will not affect electricity generation. In the event these areas experience heavy rain, power generation will decline if heavy rains continue. There will be a steady drop in electricity generation.

Three wind power plants - the Powerjeng, Nirmalapura and Daily Life Renewable Energy (DLRE) function in various locations in the district under the same company. The project was started in 2011. Seguwanq and the Widathamuni plants add 20 MW of electricity to the national grid. There are 12 towers in Seguwanq plant and 13 towers in the Widathamuni plant. The maximum electricity generation capacity from each tower will be 800 kilowatts. There is a general structure to maintain the functioning of the towers and to detect faults.

Norochcholai  Coal Power Plant and Wind Power Generating Towers in Hambanthota

The increase or drop of power generation depends on wind velocity. The Nirmalapura wind power plant is in Karamba and the Daily life Renewable Energy (DLRE) generate 20 MW of electricity, each 10 MW. The Wind Post Private Limited also plans to set up a 20 MW electricity generation plant in Elephant-Pass. In the case of wind power. There is no excess expenditure except for the cost of setting up equipment and the towers. The wind power plants in the Puttalam district contribute to 30 percent.

During the high wind season, the electricity generation capacity will be high. Electricity generation will be high between May to August and low between September to November. The shortage will be balanced by excess generation of electricity when the wids are ate high velocity. Although wind power plants have relatively little impact on the environment, compared to fossil fuel power plants, there is some concern over the noise produced by the rotor blades, aesthetic (visual) impacts and birds and bats being killed by flying into the rotors. Most of these problems have been resolved or greatly reduced through technological development or by proper sitting of wind plants.

Meanwhile, Norochcholai coal power plant also contributes to the National Grid. Under the first phase, 300 MW of electricity and under the second phase 600 MW was added Ministry sources said. Plans are afoot to add 900 MW of electricity to the national grid by the end of this year, according to Power and Energy Ministry sources. The Norochcholai Coal power plant was financed by the Chinese Government. US$ 455 million was spent for the first phase and US$ 891 million was spent for the second phase.

The Government of Sri Lanka spent Rs. 5,300 million for the first phase and Rs.11,000 million for the second phase, sources said. A jetty have been constructed with all facilities to ease the unloading of coal. Two giant cranes have been set up to expedite the unloading of coal, the sources said. The sources said that 114 metric tons of coal is used for one hour to generate electricity. An environment-friendly coal yard has been constructed in the plant premises to ensure the protection of biodiversity and the environment.

Coal required for three months can be stored in the yard. Coal with less sulfur content is imported from Indonesia. A 117 kilometre- long 220 MW high tension line has been set up from the plant to Veyangoda under the first phase to add to the national grid. Under the second phase two turbines were set up and 300 MW electricity was added to the national grid. A 100 kilometre long 220 MW high tension line was set up from Norachcholai to Anuradhapura. A sub station has been set up at Dummalasooriya, Chilaw. Environment damage has been minimised in this instance. Mobile teams also operate in the region to assess the changes taking place in the environment and biodiversity changes to minimise the hazards.

US$ 2 billion FDI targeted this year

Foreign Direct Investment (FDI) amounting to US$ 2 billion is expected by the end of the year. Minister of Investment Promotion Lakshman Yapa Abeywardena said that already US$ 430 million worth of FDI had been received during the first six months of this year and this amount excludes John Keells and Lake Leisure investments.

The Minister said that the anticipated inflow is a marked improvement from the US$ 1.2 billion FDI received last year. The private sector must work alongside the government to bring in the expected numbers and the country should reach the 8% growth mark soon, in order to compete alongside countries like Vietnam, China and Malaysia, added the minister. He emphasized that our FDI level should equal 35% of the country’s GDP and pointed out that of the needed 35%, the local investments could cover a maximum of only 8-9% and the rest had to come from foreign countries. The Minister emphasized that the amount of foreign investments should be 35% of the country's GDP and only 8-9% of this can come from the local investments. The rest has to come from foreign countries, he stressed.

Sri Lanka has 12 Industrial Zones and 8 Free Trade Zones in the country that are not being used to their full extent and the country is one of the ten economies in the world that are improving the most in the ease of doing business and the easiest among the South Asian countries. The Minister pointed out the need for the private sector to work cooperatively with the government to meet the expected target of investments this year.

SL names two free ports, three bonded areas to boost the economy

Colombo and Hambantota Ports

Sri Lanka has declared two seaports as 'free ports' and an airport and two export processing zones as bonded areas, for entrepot trade and off-shore business. Colombo and Hambantota ports have been declared as free ports. Export processing zones in Katunayake by the main international airport and Koggala and the second international airport in Mattala has been declared as bonded areas, the finance ministry said.

A special gazette notification issued by the Ministry of Finance and Planning announced that in line with the Finance Act No. 12 of 2012 Colombo and Hambantota ports has been declared as Free Ports. The Notification further envisages that Katunayake Export Processing Zone, Koggala Export Processing Zone and Mattala Rajapaksa International Air

Port as bonded areas. "The enterprises which will be benefited from this arrangement will be entreport trade involving import minor processing and re-export, off-shore business where goods can be procured from one country or manufactured in one country and shipped to another country without bringing them to Sri Lanka, These regulations are expected to bring revolutionary changes to the trade and investment policies of the country," the finance ministry said in a statement," the Ministry said in a release.

Mattala Rajapaksa International Air Port  and Katunayake Export Processing Zone  

The Ministry has set a minimum investment limit of US$ 5 million for new enterprises engaged in business activities in the ports.If the business is engaged in logistic services such as a bonded warehouse or in the cases of operation of multi country consolidation in Sri Lanka the minimum investment will be US$ 3 million. These companies are expected to achieve an annual re- export turnover of not less than US$ 20 million over a period of five years.The Ministry expects these regulations to bring revolutionary changes to the trade and investment policies of the country.

Meanwhile,Ceylon Chamber of Commerce hails the move by the government to declare Colombo and Hambantota as free ports. The Chamber also says the decision to make Katunayake, Koggala and Mirijjawila Export Processing Zones and the Mattala Rajapakse International Airport as bonded warehouses with significant tax concessions is also a good move. “We believe that this initiative lays the foundation for a paradigm shift in our economy to boost investments and exports, at a time when the Asian Giants China, India and Japan are actively exploring opportunities to invest in Sri Lanka for varying reasons”, further added the Chamber in a statement issued.