H’tota Port turnover target feasible: SLPA

6 March 2013 03:20 am Views - 4012

The Magampura Mahinda Rajapaksa Port is expected to generate turnover of up to Rs. 3.5 billion by the end of this year, according to Chairman Sri Lanka Ports Authority, Dr. Priyath Bandu Wickrama.

“With new investments coming to the port over this year, we expect that revenue levels will increase significantly. The new port is equipped with the latest technology to ensure higher efficiency and we expect that this will reduce operating costs and improve profitability,” Dr. Wickrama said.

The port generated approximately Rs. 132 million in turnover over 2012, falling well short of the SLPA’s stated target of between Rs. 500-600 million.

Failure to reach targeted revenues in 2012 was attributed to delays on construction by businesses connected with the port as a result of escalating costs of construction in the last year.

“We have now reduced the impact of many issues that we had faced earlier, particularly in the Colombo Port where a lot of issues with cargo clearance have now been dealt with. We are continuously improving productivity and all of our port developments are now on schedule,” Dr. Wickrama noted.

The Hambantota port is set to start storing bunkering fuel by June of this year, a key component of the functionality of the port project which was initiated with a view to attracting cargo ships traversing one of the busiest East-West shipping lanes for refueling and service.

The port, which is currently the single largest on land port development in the 21st Century, is estimated to cost a total of US$ 1.5 billion.

The first phase of construction was completed at a cost of US$ 361 million, of which the SLPA took on 15% of expenditure whilst the remaining 65% of funding requirements were met by the China Export–Import Bank.

Funding for the second phase of the project’s development will also come from China through a reported US$ 810 million loan. Chinese contractor, China Communications Construction Company will manage the second phase of development.

The port has already secured US$ 700 million in investments according to Wickrama, including US$ 220 million from major Indian sugar producer, Shree Renuka Sugars Ltd. A further US$ 1 billion in investments is currently being anticipated going forward with the SLPA reportedly calling for requests for proposals by May. The SLPA posted a profit after tax of Rs. 4.09 billion over 2012, against just Rs. 582.6 million in the preceding year.

In terms of efficiency ratios, the SLPA improved its Net Profit per Twenty-foot Equivalent Unit (TEU) to Rs. 2,509 as compared with Rs. 1,468 in the preceding year and a loss of Rs. 576 per TEU in 2010.