Greenlight for Colombo South Port by September

Dispelling earlier rumours that Aitken Spence Holdings was out of the Rs.50bn Colombo Port Expansion Project (CPEP) deal, a source close to the deal said that according to amendments submitted last week, tender hopeful- Aitken Spence-China Merchant consortium had agreed to increase the Net Present Value (NPV) of the project from Rs.14,375mn (US $ 125) to Rs.17,250mn (US$150mn).
“A draft Letter of Intent (LoI) was forwarded to the consortium and amendments proposed by them will be considered by the Attorney General before the final LoI is prepared. Both parties had to compromise a lot,” he added.
Once given the greenlight by the Attorney General, which is expected this week, the LoI will be submitted to the Cabinet of Ministers, by way of a Cabinet Memorandum. Thereafter, the government will issue the final LoI to the consortium. Cabinet will give the nod hopefully by first week of September if everything goes smoothly. All the while, Sri Lanka Ports Authority (SLPA) and the consortium had been unable to come to a settlement on the revised bid for the much-delayed Colombo South Port project as they couldn’t agree on the financial bid submitted by the latter. The consortium was asked to submit a fresh bid as the bid conditions had not met stipulated criteria, while bidder was known to have written to the Cabinet Appointed Negotiation Committee (CANC) requesting for extended time to review any alteration. Consortium comprised of Aitken Spence and China Merchant Holdings jointly tendered the only bid to Design, Develop and Operate a container terminal as part of government’s initiatives to expand the already congested Colombo Port.Out of the Rs.50bn funding required, nearly Rs.30bn is made available by the Asian Development Bank (ADB) as a loan on the basis that the project be carried out with the participation of the private sector.
The much delayed project received just one bid in comparison to when bids were initially called for in 2007 June, where five parties - John Keells Holdings (which presently manages South Asia Gateway Terminals) in partnership with Pembinan Ridzai Berhard of Malaysia, Hayleys -Carsons and in partnership with Terminal Link of France, Aitken Spence in partnership with Port of Singapore Authority (PSA), Hutchison Terminals of Hong Kong and China’s Hanjin Shipping with its local agent - Navigation Maritime, sent in their bids. (News- Bottom Line)