Updated: June 2, 2022 9:01:27 am
Sri Lanka’s announcement that it plans to develop Trincomalee as an “industrial harbour” and will soon float tenders for this could see the economically beleaguered nation put up a couple of thousand hectares of land on lease to set up industries in a special economic zone and the associated development of the strategically located port, stirring up geopolitical interest in that part of the Indian Ocean.
“We are actually planning to go for an Expression of Interest (EoI)to develop Trincomalee Port as an industrial port. That means we will be asking not only from one party, but whoever the industrialists are who want to come and utilise the port premises. We have large land, some 2,400 hectares, that surrounds the port of Trincomalee,” Prasantha Jayamanna, chairman of Sri Lanka Ports Authority said on Tuesday.
Jayamanna was speaking to representatives of shipping companies and port workers’ unions to allay concerns about the slowing down of loading and offloading operations at Colombo Port — a major regional transhipment hub — due to a foreign exchange shortage that has resulted in fuel scarcity and affected supply chains.
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The proposal to develop an industrial harbour in Trincomalee is a long-standing plan to monetise land that belongs to the Sri Lanka Port Authority, by getting foreign and local investment for a special economic zone, an industrial park, or an energy hub.
This would also entail the development of the port for non-containerised cargo traffic, such as cement, coal or other industrial raw material.
“We are planning to call for EoIs soon. We had planned to do this in April, but delayed it till the situation [improved], because we expect a lot of local industries to also come and invest in the port,” Jayamanna said.
Jayamanna had made similar remarks in January this year. It is unclear when SLPA will act on its intentions. India, which has already made a substantial investment in Trincomalee, is likely to be interested in the proposal both as a commercial project and as a strategic investment, a source in Sri Lanka said.
Earlier this year, Lanka Indian Oil Company, a subsidiary of Indian Oil Company, and Ceylon Petroleum Corporation signed an agreement to develop a massive oil storage tank farm built during British rule at Trincomalee. The oil storage facility is located at the harbour and has its own jetty. The two entities have formed a special purpose joint venture called Trinco Petroleum Terminals Ltd for the development of 85 tanks — all in decrepit condition.
Trincomalee already has several dedicated port terminals — apart from the Lanka IOC facility, it has the Tokyo Cement facility, and grain facility for a flour factory, and a tea terminal. There is also a jetty for bulk cargo such as coal, gypsum and cement.
Besides India, the development of Trincomalee port has been of interest to several countries, including Japan and the US. It offered not just one of Asia’s finest natural harbours, but was also seen as a way to balance China’s influence in the country, and dominate the martime trade routes in the region through its involvement in Colombo port for container traffic and Hambantota port for cargo. Japan commissioned 2020 ADB study on the development of Trincomalee port.
There have been questions if Sri Lanka needed more than one port, especially, as Hambantota, which was developed with Chinese financial assistance as a cargo port has not taken off and its operations have remained below projections.
However, the ADB study concluded that Trincomalee harbour, located on Sri Lanka’s eastern seaboard, with its key benefits of “natural deep water, shelter, unique tourist places and ample land for industrial and logistics in the proximity of the port” was ideally placed to service the projected growth of maritime cargo trade in the region, especially with regard to development of ports in Bangladesh and Myanmar and on India’s eastern sea board.
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