Frederica Jansz
The Sunday Leader
December 7, 2003

A feasibility study on the proposed international seaport at Hambantota has been deemed by a steering committee of the Sri Lanka Ports Authority to be un-bankable.

A task force appointed by the steering committee at the Port Development and Shipping Ministry having reviewed the final report of the feasibility study for the development of the seaport in Hambantota has noted that the study is not comprehensive. As a result, it is not bankable. The task force has noted that the feasibility study conducted by a Canadian organisation is in fact in violation of the Memorandum of Understanding signed with the Ministry as it was commissioned to submit a bankable feasibility study.

The steering committee is chaired by Secretary, Port Development and Shipping Ministry, Ranjith Maligaspe. The task force was chaired by Technical Advisor to Chairman, SLPA, G.P. Weerasinghe and included Moratuwa University Professor Samantha Hettiarachchi, Project Engineer, SLPA, Susantha Abeysiriwardena, Deputy Chief Engineer, SLPA, Janaka Kulakulasuriya and Ajit Abeysekera from the Treasury.

Chairman Sri Lanka Ports Authority (SLPA), Parakrama Dissanayake voiced his deep disappointment with the lack of professionalism displayed by the Canadian based organisation commissioned by the Port Development and Shipping Ministry to conduct this study.

SNC Lavalin International based in Canada signed an agreement with the SLPA on June 7 last year, to conduct a feasibility study on developing a seaport at Hambantota.

Commenting on the study, Parakrama Dissanayake said, “what we see is that the conclusions formulated in the report submitted by SNC Lavalin is based on already available information and not on primary research conducted independently by the Canadian group.”

The SLPA Chief noted that what was required was an independent feasibility study that would provide the government with sufficient information to make an informed decision on the viability of developing a major seaport at Hambantota. This underlying and vital requirement the feasibility study has failed to provide, he said.

Accusations are being levelled that political machinations prevented the French based Port of Marseille Authority which had also expressed interest in conducting a feasibility study at Hambantota from doing so. Thus, having put all its eggs into one basket the government is now back to square one, with an un-bankable feasibility study following the partial report submitted by SNC-Lavalin.

Request for time

The local agent for SNC-Lavalin is Chairman, Erisha International (Pvt) Ltd. Cecil Ekanayake. Ekanayake when quizzed defended the report submitted by SNC-Lavalin saying, “one thing I can tell you is that we have done an excellent job.” Pressed to elaborate on the fact that the study is not bankable, Ekanayake requested for time saying he could meet next week and answer any further queries.

The task force appointed by the Ministry to evaluate the feasibility study has pointed out that SNC-Lavalin has not studied the physical data of the entire terrain that envelops Hambantota but, has forwarded a proposal for an area where data to some extent was already obtainable.

The committee has further pointed out that the Canadian group has identified container operations as a necessity for the first stage of development of the port in Hambantota, not taking into consideration what impact such a decision would have on the current facilities for container handling at the Colombo Port.

Such a haphazard recommendation is cause for serious concern as transshipment container traffic is volatile and could even bypass Sri Lanka if the right forward plans to meet their increasing demands are not in place in time. The task force has noted that SNC-Lavalin having failed to, in this context, to analyse the characteristics associated with the movement of container traffic internationally is another cause for serious concern.

Error

The committee adds that there also seems to be an error when the report states that the 20 meter contour is less than 0.5 km from the coast line as the 20 meter contour lies around 1.6 km from the coast line. According to the task force, the volume of rock excavation identified as 16.5 million cubic meters in the report is another major flaw in the report as the rock removal of the Galle outer harbour development project is only 13,725 cubic meters.

The government in this instance seems to have placed all its eggs in one basket by allowing only SNC Lavalin to conduct the feasibility study when the French company Port of Marseille Authority had also expressed interest but were sidelined.

The cabinet paper tabled by the Ports and Shipping Ministry sought approval to engage SNC-Lavalin International to conduct a bankable feasibility study of the seaport, subject to conditions laid down by the technical evaluation committee (TEC) and at no cost to the government of Sri Lanka.

The same cabinet paper further stated that it was necessary to direct TEC to study the proposals of the French company as an alternative option.

For some reason this was not done – and only SNC-Lavalin commissioned. The Memorandum of Understanding between SNC-Lavalin and the SLPA specifically indicated that the Canadian consultancy group was being commissioned to carry out a ‘Bankable Feasibility Study’ for the proposed major international seaport at Hambantota.

The government has at all times maintained that the construction of a seaport at Hambantota is a project of ‘high priority’ aimed to strengthen Sri Lanka’s maritime industry and help Sri Lanka regain its historical position as a maritime hub in South Asia. It was further envisaged that a seaport at Hambantota would improve the economic situation of the southern region, viewed as Sri Lanka’s poorest region and stimulate the industrial development of the region. The proposed port is viewed as a hub on the Europe-Middle East and Far East shipping corridor and a gateway to the India-Pakistan-Bangladesh sub-continent.

The estimated capital investment has been placed at approximately US $ 650 million for stage one of the development and a total of US$1.48 billion for ultimate port development. The government has stated this will be a public private partnership between the government and the private sector.

This study was funded in part (75%) by the Canadian International Development Agency (CIDA) while 25% of the funding was met by SNC-Lavalin.

The primary objectives of the study were to provide the government with a bankable report on the viability of Hambantota as a major hub port in the southern region. It was also based on the governments having identified the development of the Hambantota seaport as high priority.

Report – a failure

The study by SNC-Lavalin however has proved to be a dismal failure. The Ministry task force committee has ruled that a full scale bankable feasibility study consisting of financial, commercial, economic and environmental viability has not been submitted – instead only a partial feasibility report.

Despite it being only a partial report the study has identified a location for the seaport at Karagam Lewaya. The location has been identified despite the report not having sufficient data to determine market requirements considering national, local and global shipping trends.

The study has indicated that the land use of the port must be given for a container port. This recommendation should have been gradual taking into consideration the impact a decision of this nature would have on the Colombo Port.

The study lacks in sufficient detail a comprehensive economical and financial evaluation of the projects. Data collected on waves and currents has been limited to only two months of study when it should have been done over two monsoons. A soil investigation has not been done in the sea but limited to land only while no study has been done on sediment transport and bathymetry.

Details

An evaluation of shipping trends and an assessment of traffic projections are also not given in sufficient detail.

With regard to sand barrowing and rock quarrying no evaluation has been done while requirements for a mathematical modeling to study shore wave climate, water quality, hydronamics, sediment transport and beach development have all been indicated to be done in phase II. SNC-Lavalin has not been commissioned for phase II of the project and the task force committee has deemed that in ignoring these requirements by maintaining it would be done in phase II is irresponsible on the part of SNC.

The technical feasibility study of the report has also not addressed requirements such as calmness study, rock supply to break waters, location and quality of reclaimed materials and seasonal and long term coastline changes for the selected site.

The principal purpose of such field investigations would have helped determine at which level rock would be encountered for developing structural concepts and estimating bedrock quantities.

It is an indisputable fact that significant and unwavering community and political support exists in favour of the Hambantota seaport project. Even SNC -Lavalin in its final report on of the feasibility study noted that there is tremendous enthusiasm and support for the project, and expectation of benefits in terms of economic renewal and employment creation opportunities.

This project in fact is a unique opportunity for the government, the local community and international partners to co-design a model harbour development project as a tool for poverty alleviation. Ideally the project is expected to provide direct and indirect benefits to the local community, the region and the nation.

Unfortunately for this country once more the project is on hold following the un-bankable feasibility study submitted by SNC-Lavalin International.