Bigger and better: Major investments in port facilities are currently under way

The Port of Colombo stands today as one of the busiest and most competitive in the region, after years of expansion carried out in partnership with the private sector. The private sector will remain a critical pillar of future port expansion, with the ongoing Colombo Port Expansion Project (CPEP) managed by the Sri Lanka Port Authority (SLPA) expected to see a number of private contractors and management firms benefit from new projects.

Widening Berth

Sri Lanka has risen to become a regional shipping and trans-shipment hub, with its increasingly efficient and modern facilities. Although the Port of Colombo remains the largest and most important port facility, ongoing expansion in Galle, Trincomalee and Hambantota are expected to see the width and breadth of shipping activities expand considerably in the coming years. The Ministry of Ports and Shipping oversees port policy development in Sri Lanka, while the SLPA is tasked with day-to-day management of port activities, as well as new port expansion projects, including the CPEP, the recently completed Magampura Mahinda Rajapaksa Port (MMRP) and long-term projects aimed at expanding capacity on the east coast. Many of these projects have been rolled out with the private sector under a new public-private partnership (PPP) model.

Expansion At Colombo

The largest and busiest port in the country, the Port of Colombo is located on the south-west shores of the Kelani River. Recent modernisation efforts kicked off in the 1980s, when the facility was equipped with gantries, cranes and updated terminal infrastructure, although it was not until liberalisation efforts gathered pace in the 1990s that the Port of Colombo assumed its present form. The opening of the Queen Elizabeth Quay, now known as the South Asian Gateway Terminal (SAGT), in 1999 under a PPP scheme marked the beginning of rising private sector involvement. Today, SAGT’s cranes make an average of 34 moves per hour. In October 2015 US trade magazine Journal of officially inaugurated the East Container Terminal, the second deepwater terminal at the Port of Colombo, in April 2015. The port boasts an 18-metre draught, which will allow it to handle Panamax vessels with up to 18,000 TEUs of capacity. In early 2016 Sri Lanka’s Cabinet invited expressions of interest to run the terminal as a joint venture, with the SLPA retaining 51% equity. The $500m project will include operationalisation of the existing 400 metres of deepwater berth and the full design, build, finance, operation and maintenance of the remaining 800 metres of berth. The concession is likely to be for 35 years.

“Capacity in the Port of Colombo must be considered within the context of the deep draft South Harbour basin and the 14.25-metre old basin as two separate capacities. Today, while only about 24% of vessels calling into the South Harbour require a draft deeper than 14 metres, the pipeline for big ships over 14,000 TEUs placed by carriers already calling on Colombo is close to 75%,” Ted Muttiah, chief commercial officer at SAGT, told OBG. “This combined with the various pending trade agreements presents high growth potential of throughput for the Port of Colombo. Thus, the earliest possible commissioning of the East Container Terminal is a necessity in support of the government’s policies for economic revival.”


Outside of Colombo, expansion is also ongoing at a host of new ports, including the MMRP. The government expects the port, which opened its first phase in 2010, will be a service- and industry-oriented facility. The project’s $361m first phase was funded by the Export-Import Bank of China and kicked off in January 2008, reaching completion in 2010. The second phase of construction remains ongoing under an SLPA-estimated cost of around $800m. Bunkering facilities began operations in June 2014 while a tank farm storing marine and aviation fuel has subsequently commenced commercial operations. The first major private investment in the port, Sri Lanka’s Laugfs Gas finalised a deal for a liquefied petroleum gas terminal in late 2015.


Outside of Hambantota and Colombo, sector-specific port expansion projects are expected to further transform and diversify the country’s port offerings. The Trincomalee Port, for example, has been earmarked as a major shipping and export hub for the north-east region of the country. According to the SLPA, Trincomalee Harbour offers 10 times the water and land as the Port of Colombo and is set to be transformed into a hub for bulk and break bulk cargo and related activities, including heavy industry and agriculture. SLPA is currently working to re-develop Trincomalee as a major urban growth centre, recently completing a zoning plan for the surrounding area in conjunction with the Board of Investment and Sri Lanka Tourism Development Authority. The next stage of development will involve a call for proposals from potential investors in the city’s Industrial Park and Tourism Zone, under the Trincomalee Port City Development Project, which will see an estimated 2000 ha of state land released.


Oluvil Port, which opened in Eastern Province in September 2013, has been developed as a centre for commercial fisheries. The LKR7bn ($50.4m) project broke ground in 2008 after the SLPA and Danish Ministry of Foreign Affairs signed a €46m agreement, which included construction of 330 metres of quay with an eight-metre draught, a 200-metre fishing quay with a three-metre draught and a 1500-metre breakwater built from 1m tonnes of stone sourced from local quarries. Danish construction firm MT HØjgaard built two breakwaters during the first phase of construction, and dredged the port to handle vessels of up to 16,000 tonnes during the second phase. In addition, access roads, residential buildings, warehouses, office facilities, refrigerated warehouses, service buildings and a 4.2-km seawall were constructed. Oluvil is expected to form another link in the south-eastern chain of coastal harbours, providing convenient and cost-effective access to goods and cargo originating on the west coast.

Galle Port

Galle Port, meanwhile, is expected to be developed as a leisure facility over two phases. The first phase entails construction of a yacht marina for tourists drawn in by the region’s coral reefs, tropical rainforests and white sand beaches. Infrastructure damaged during the December 2004 tsunami is now being redeveloped by the SLPA. The first phase includes construction of berthing facilities for 22 15-metre-long yachts at a southern breakwater area, a service and repair facility, duty free shop, café and clubhouse, and tourism information centre at a cost of LKR125m ($900,000). The yacht berthing facilities will be extended to accommodate an additional 30 craft, as well as a yacht-lifting facility, car park and dry berthing facility, at a cost of LKR175m ($1.3m). The project’s second phase will see construction of a breakwater to protect the entire bay, as well as a hotel and resort facilities, a yacht marina and multi-purpose berth, potentially under a BOT concession.