Risk premium on Sri Lanka ports removed

by Shirajiv Sirimane

SLPA Chairman Dr. Priyath Wickrama

Master Divers Chairman, Ariyaseela Wickramanayake

The removal of the war risk premium imposed for Ships entering Colombo will have a positive impact on the local economy with regard to exports.

Chairman Master Divers, Ariyaseela Wickramanayake said that exporters were forced to bear a war risk premium and this reduced their competitiveness. "The exports had to cushion this and with the war risk premium off it would add to their profits," he said.

He said this would also help the importers as they have to pay less for freight. .

Wickramanayake said that removing the War Risk premium imposed on Sri Lanka would prove to the rest of the world that Sri Lanka is a safe country.

Sri Lanka Ports Authority (SLPA) Chairman Dr. Wickrama said that his objective of getting Sri Lanka de-listed from 'Listed Areas" (No additional war risk premium for calling at Sri Lanka ports) has now been achieved.

Sri Lanka was grappling to cope with negative sentiments of International intelligence companies that forecasts commercially relevant political and violent risks despite the end of the conflict and decrease in the overall risk level of Sri Lanka from 3.4 to high 2.6 (From risk scale of 10 - India is at 3.1, Pakistan is at 5.0 and Bangladesh at 3.0).

The position maintained by the Joint War Committee (JWC) and the Joint Cargo Committee (JCC) on Sri Lanka at that time was that the overall risk level has come down and it is important that Sri Lanka, particularly the Ministry of Ports and Aviation and the Sri Lanka Ports Authority maintain a regular engagement with the Lloyds Marketing Association (LMA), and companies that report to JWC and JCC on hull and cargo insurance related risks to shipping.

Under the guidance of President Mahinda Rajapaksa, Chamal Rajapaksa the previous Minister of Ports and Aviation, appointed a committee in August 2009 headed by Gotabhaya Rajapaksa Secretary, Ministry of Defence, Public Security, Law and Order, with several Line Ministry officials and marine related parties, to prepare an action plan as to how Sri Lanka could be off the 'Listed Areas' maintained by Joint War Committee (JWC).

A delegation led by the Chairman of SLPA Dr. Wickrama proceeded to 'London in December' 09 and clarified the present National Security plan in place for ports in Sri Lanka, and also extended an invitation to JWC and independent Intelligent Consultants to make their own risks assessments on Sri Lanka, with a view to reaching the objective of establishing Sri Lanka as a risk free country which will draw more foreign investors especially which will bring a remarkable boost to the Government's development programs in the North and the East.

'Exclusive Analysis' recently visited the North of Sri Lanka and also had discussions with Ministry of Defence, Sri Lanka Navy, Chief of National Intelligence and various pursues in Sri Lanka's Shipping and Marine industry to understand the current security measures in accordance with the National Security plan and the ongoing economic reforms and reconstruction in the North and the East of Sri Lanka.

The Joint War Committee has recently reviewed Sri Lanka's risk levels, and have deleted Sri Lanka, effective from June 09, 2010 from the 'Listed Areas' list maintained by the JWC for hull War, Strikes, Terrorism and Related perils and thereby reassuring that all Sri Lankan ports are free of any war related risks and additional war risk premium.

Sri Lanka Ports Authority has already embarked on upgrading the ports of Sri Lanka with enhanced infrastructures and modern ship handling facilities to the tune of US$ 1.5 billion and the above achievement will give a tremendous boost, specially to the port of Colombo to be attractive compared to the regional ports, and this will help our national economy to grow in terms of revenue.