SLPA operating profit increases 126 percent in 2010

by Sapumali GALAGODA

The performance of port operations increased significantly in 2010, with the gradual recovery in international trade. The Colombo port achieved a new 4.1 million containers supported by steadfast growth in both import-export and transshipment cargo. Total container handling throughout increased by 19.4 percent to 4.1 million TEUs (Twenty Foot equivalent Container Units) in 2010, states the 2010 Central Bank Report.

Aerial view of the Hambantota Port

This also reflects a 10.8 percent increase compared to the 3.7 million TEUs in 2008, the highest ever performance before the global recession.

Transshipment handling increased by 18 percent while cargo handling at the port of Colombo increased by 26.7 percent in 2010.

Global economic recovery has helped the Sri Lanka Ports Authority (SLPA) to improve its financial performance.

The revenue of the SLPA increased by 21.2 percent to Rs. 28.3 billion, while the operating expenditure increased by 11.7 percent to Rs. 23.9 billion.

The operating profit of the SLPA increased by 126 percent to Rs. 4.4 billion in 2010.

The capital expenditure incurred was Rs. 6.1 billion compared to Rs. 3.8 billion in 2009.

The development of port infrastructure and services is at the forefront of the government's infrastructure development agenda. Phase 1 of the Mahinda Rajapaksa Port in Magampura was inaugurated in November 2010.

The port is expected to initially function as a service and industrial port.

It will later be developed to handle transshipment cargo, specifically from the Indian sub continent, East Africa and other neighbouring regions.

Construction work on Phase 2 of the port is under way at an estimated cost of $800 million.

Construction of bunkering facilities and a Tank Farm with 14 tanks with a storage capacity of 80,000 cubic metres of petroleum products is scheduled to be completed by October 2011.

The supply of bunkers at the port is expected to commence this year. Upon completion, the Mahinda Rajapaksa Port will be the largest port in South Asia.

Meanwhile, 48 percent of the construction work of the breakwater was completed in the Colombo South Port by end 2010.

The construction work of the first terminal is expected to commence in 2011 and is expected to be ready for operations in 2013.

The South Terminal of the Colombo South Port project is designed as a Public Private Partnership (PPP) project on Build, Operate and Transfer (BOT) basis.

The Colombo South Port project with three terminals, and each terminal having the capacity of 2.4 million TEUs per annum, will increase the capacity of the Colombo Port by 160 percent upon completion.

Construction work on the Port of Oluvil is expected to be completed by June.

The government has declared its intention to develop the country as a regional shipping hub. Sri Lanka's strategic location within close proximity to the East West maritime route used for international trade, the growing trade in the Indian sub continent and the increased level of integration with the rest of the world, has helped Sri Lanka to emerge as a shipping hub in the region.

The SLPA has been pro actively involved in addressing capacity limitations of the port sector and the modernisation of port operations through infusion of new technology to make Sri Lanka a shipping hub in the region.

Sri Lanka has massive potential to develop the port and shipping industry into one of the prime sectors of the economy, which would help generate foreign exchange and a range of direct and indirect employment opportunities in the medium term.

The SLPA has taken several measures to improve productivity and efficiency of port operations.

It is necessary for Sri Lanka to differentiate itself as a unique, high quality and timely service provider to emerge as a shipping hub.

Separate bays have been planned within the Port of Colombo to facilitate importers and their representatives to clear cargo with minimum delay.

Facilities at the Jaya Container Terminal of the Port of Colombo are being upgraded to enhance efficiency and productivity. Steps were taken to set up a 'Cargo Village' at Peliyagoda on a land with road and rail connectivity. Also, an electronic documentation transfer system will be introduced for importers and exporters to submit shipping documents without visiting the port. An online payment system will also be made available for port users.

'Although, Sri Lanka is strategically positioned on a popular maritime route, the ports sector faces competition from counterparts in the region. Hence to maintain competitiveness, it is essential to continuously focus on improving the infrastructure of the ports', states the report.

While many measures are under way, less importance has been placed on the development of an effective inter-model transport system.

It is important to improve the road and rail connectivity to and from the port to ensure cost effective transportation within the country.

Further, there is an urgent need to implement the planned port information systems linking other key ports in the region.

It is also necessary for the SLPA to engage in cooperative ventures with ports in countries such as China, India and those in Africa.

This can help SLPA to gain expertise related to the development and management of state-of-the-art ports.

This will also provide an opportunity for SLPA to forge partnerships with major shipping lines.