Dockyard lays keel for its biggest ever $53 m shipbuilding contract

• 5000-ton capacity Cable Laying Vessel for top Japanese firm
• PM says confidence on SL from foreign firms and investors on the rise

By Charumini de Silva

Colombo Dockyard PLC, Sri Lanka’s premier ship repair and shipbuilding facility has obtained its first-ever contract from a Japanese company, Kokusai Cable Ship Co. Ltd. (KCS) and marked the keel laying ceremony to construct its foremost cable laying vessel, costing $53 million.

It is the biggest ever vessel in terms of contract value and the longest-ever at a length of 111.3 metres to be built by Colombo Dockyard.  This cable laying vessel is scheduled to be delivered on or before 29 March 2019.

Addressing at the ceremony Prime Minister Ranil Wickremesinghe insisted that achieving contracts of this nature clearly highlights foreign companies and investors confidence in Sri Lanka, while noting Colombo Dockyard has been responsible for a part of it.  

The historical contract to construct cable laying vessel was signed on 7 April by Colombo Dockyard Plc Managing Director and CEO D.V. Abeysinghe in the presence of KCS Chairman Dr. Toru Takehara, while Managing Director – Engineering and Facility Planning Department Yukihiro Fuji signed on behalf of KCS.

 “This shows the ability we have and what we can do in the future. Today we see that there is significant potential for us to grow in ship building sector,” Wickremesinghe added.

Noting that around 60% of the revenue of Colombo Port is generated by the transshipment businesses to India, Premier said it could be further increased to 75% looking at the growth prospects of Indian economy. 

“Even though India builds a port or two it is still fine. We have the talent and the skills. To develop our ports we need to be forthcoming to India, to benefit from its growth,” he pointed out.

Stressing on future port development plans in Colombo, Hambantota and Trincomalee as well as airport expansions in Mattala and Katunayake he believes that those would contribute immensely to build Sri Lanka’s economy similar to Singapore. 

“We can build the country just how Singapore developed its port and airport. We can do the same. We don’t have to sell the country to anybody. We need to develop our ports. We can make the biggest port in Colombo, second in Trincomalee and the other in Hambantota. We can develop like Singapore. If we are not taking the advantage of our geographical location, we cannot develop,” he added.

Wickremesinghe assured that the Government has now taken the country on a high growth pace and Sri Lanka should be able to return to economic normalcy by 2025 adding that next two years are slated to repay highest debts.

 According to the Prime Minister the coalition Government has created around 400,000 direct, indirect, formal and informal jobs during the past two years.Wickremesinghe commended KCS for having the confidence in Sri Lanka expressed optimism to see more and more ships being constructed in Colombo. He also appreciated the longstanding friendship with Government of Japan and its assistance for major contributions for development of Sri Lanka.

“Japan from the very beginning has been a close friend of Sri Lanka. The number of projects that you all have helped us in many areas is immense. We look forward for a much closer cooperation by hosting a delegation of Japanese businessmen who will be here in January next year,” he stated.

KCS President Takaaki Anraku said they intend to build the ship to expand its business worldwide and to strive in telecommunications construction business. 

Stating KCS poses two cable laying vessels built in Japan, he said this was the first time they are building a cable ship overseas. 

“I believe this project is challenging and viable for us. This ship will contribute to lay cables for telecommunication services around the world. I hope this cable ship become a memorable for all people in Colombo Dockyard as well,” Anraku added.

KCS is a licensed to engage in electrical machinery/ telecommunications construction business.

Colombo Dockyard Plc Managing Director and CEO D.V. Abeysinghe said the tactical collaboration with Onomichi Dockyard Co. Ltd. of Japan has been a highly successful venture that has influenced Colombo Dockyards achievements over the years.

It was pointed that KCS opted Sri Lanka mainly due to the latest design of the vessel, which cannot be manufactured in Japan. “It is a very latest design coming from Norway.”

The basic design and production drawings is supplied by a Norwegian firm called VARD Designs. This cable laying vessel is equipped with high technology, intend for subsea operation and cable installation and repair works of optical cables as power cables adding to the versatility of the vessel and has cable carrying capacity of 5,000 tonnes.  

“This contract reinstates the high shipbuilding standards achieved by us. We improved our work processors, procedures, facilitates we achieved ISO 9001:2015 quality standard as well. We are happy to note that our quality standards are now on par with Japanese quality standards,” he added. 

Abeysinghe also commended Japanese Government and Japanese Embassy for supporting and providing assistance to enhance the maritime security of Sri Lanka.

Pix by Lasantha Kumara

Colombo Dockyard calls for more support to boost shipbuilding

Given the opportunity, Colombo Dockyard PLC has expressed optimism to support building ships run with LNG fuel and provide its related facilities if there is support from the Government authorities. 

Pointing out that in the time there will be a lot of environmental rules with emissions, Colombo Dockyard Plc Managing Director and CEO D.V. Abeysinghe said they were keen on exploring the LNG sector given the opportunity.

“In another five years there will be a lot of requirement for ships to run with LNG fuel. International Maritime Organization (IMO) is looking for that kind of environmental friendly fuels for future operations,” he told journalists on the sidelines of an event recently.

However noted when ships are run with LNG fuel and if there is no bunkering place in Colombo and in future there may be requirements for LNG bunkering also. 

“If there is a person who can do it (LNG), we can support by building that kind of ships, tanks and pipelines,” he added

In the case of ship building profit margins he asserted it was very marginal due to high competition. “It is always less than 4%. We cannot have a big margin,” he stated.

Noting that the firm is currently incurring losses, Abeysinghe stressed they are trying to mitigate at least to reduce losses compared to last year, while expressing confidence by next year Colombo Dockyard would be able to recover with heavy engineering and ship repairs. 

In addition to this project the Colombo Dockyard has secured two other contracts to build coast guard ships for Sri Lanka Navy costing $103 million.

“The Cabinet has approved the contract in March and now negotiations are ongoing for the financing. Finance is done by Japanese banks. Our external resource department is negotiating with Japanese banks right now. We can hopefully start next year,” he explained.

Abeysinghe also pointed they require land to expand its facilities and have allocated Rs. 200 million. “We cannot expand this land for ship building. At the moment we have 11 hectares and we need some peers to increase the capacity of other activities of engineering.”

According to there are a lot of steel projects in the pipeline through various mega projects the Government has undertaken in terms of construction of roads and bridges. (CDs)