SLPA to start 55,000 ton Hambantota port ship fuelling unit
Monday, 19 May 2014 00:00
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Hopes to handle 55,000 tons initially; to expand to 650,000
Opening of unit has been delayed since May 2011
REUTERS: Sri Lanka will start bunkering operations by 15 June at its newly-built $ 95 million ship fuelling unit in the deep south port in Hambantota with an initial capacity of 55,000 tons, the head of the state-run Ports Authority told Reuters on Friday.
The much-delayed bunkering terminal was originally due to open the ship fuel facility in May 2011, six months after President Mahinda Rajapaksa launched the $ 1.5 billion port in his home town of Hambantota.
“We will start before 15 June. Everything is tested and we are getting the first parcel most probably in the first week of June,” Priyath Wickrama, Chairman of the state-run Sri Lanka Ports Authority (SLPA) told Reuters in an interview.
“We are starting from zero. So the first year is going to be a promotional year. We will give (bunkering services) at the lowest possible rate in the Indian subcontinent.”
The unit will initially handle 55,000 tons of shipping fuel with eight tanks and is expected to add a further 100,000 tons in a second phase. Wickrama said it could be expanded up to 650,000 tons depending on the demand, but gave no details.
The SLPA is targeting 300,000-400,000 tons of sales in the first year and then to expand it to 1 million tons per annum within five years, Wickrama said.
He said another 3.5 million tons of capacity could be built up for fuel and trans-shipments in the future.
China’s Exim Bank loaned 85% of the $ 77 million original estimated cost for the first phase. However, the SLPA was forced to borrow a further $ 18 million from the state-run Bank of Ceylon.
The SLPA will operate the bunkering unit through its fully owned private firm Magampura Port Management Company.
Strategic port
Hambantota port is located at a strategic location along an ancient “silk route” for trade and one of the world’s biggest East-West shipping lanes.
Wickrama said the port is operating as a trans-shipment point for vessels from India, Japan, Korea, Malaysia and Thailand to the Middle East and Africa. On average, 25 vessels call at the port every month.
Opposition politicians and economists have said Hambantota port has yet to deliver expected economic benefits with revenue recorded at Rs. 1 billion ($ 7.67 million) in 2013, rising from around Rs. 400 million in 2012.
However, Wickrama said the port’s business activities will pick up with bunkering and eight new berths in the second phase, which is expected to be completed by 2015.
Colombo port, the $ 67 billion economy’s main commercial harbour, which has a shipping fuel storage capacity of around 33,000 tons per month, is facing “huge constraints” of storage space, according to bunker suppliers.
Wickrama said the SLPA had already discussed with all main shipping lines calling Colombo port and is in the process of extending Hambantota bunkering services through existing Colombo terminal services agreements.
“We are trying to put this bunkering component also into that agreement. Every ship has to wait 2-3 hours outside Colombo port. Instead of waiting, they can get bunkers from Hambantota.”
“We will monitor the Indian subcontinent bunker price and always we will maintain a price below that,” he said.
