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Russell Barling

A Sri Lankan government official says the container operator is teaming up with a Malaysian partner in Colombo

Hutchison Whampoa and a Malaysian business partner are looking to take an equity stake in the Sri Lankan Port Authority with a view to taking part in a US$400 million expansion of the port of Colombo, according to a government official.

Arjunna Mahendran, chairman of the Sri Lankan government's Board of Investment, told the South China Morning Post yesterday that KMT Westport, 31.5 per cent owned by Hutchison Port Holdings, had joined PSA Corp and other leading port operators this week in expressing an interest in expanding south Asia's busiest transshipment hub.

'Westport and PSA Corp are two of the companies which have publicly stated their interest in taking an equity stake. The other firm has asked to remain anonymous for now,'  Mr Mahendran said.

He would not say what size stake would be available in the authority, which had asked for expressions of interest in Colombo's 12-berth south port development.

It is thought additional interest in the project - to be offered on a build, operate and transfer basis - was expressed by the terminal development arm of a major shipping line.

The authority's revenue jumped a comparative 18 per cent in the first half to 8.4 billion rupees (HK$693 million), driven by a 12 per cent growth in throughput at the port of Colombo, which handled about 930,600 teu (20ft equivalent units).

'It is our goal to have at least four berths ready for operation in 2007, by which time we expect the existing facilities to have reached their handling capacity,' Mr Mahendran said.

A Hutchison Port Holdings spokesman in Hong Kong said last night that neither Hutchison nor Westport were involved in discussions about taking an equity stake in the port authority or the port development project.

The majority of the investment in the southern expansion of Colombo would be used to construct a 5km breakwater at the new site, which was projected to cost about US$300 million, Mr Mahendran said.

The rest of the investment would go towards the development of the new berths, only 10 of which would be offered in the tender.

In May, Hutchison had its tender to develop the proposed HK$1.5 billion Nhava Sheva container terminal near Mumbai blocked by India's Ministry of Defence, which cited security concerns.

Hutchison, the world's No1 container port operator, already has an interest in another south Asian port venture - Karachi in Pakistan.

Mr Mahendran said construction of the breakwater in Colombo would have to begin in the middle to the end of next year in order for the project to be completed by 2007.

'The construction design is modular in that development of the berths will begin when the breakwater covers their intended locations,' he said.

Colombo is strategically located just off the major shipping routes between the Suez Canal, which is the gateway to Europe and Southeast Asia.

The cessation of Sri Lanka's civil war earlier this year has seen international maritime trade gain momentum each month at the capital city's port.

With limited domestic demand, the port has made its name by being the transfer point for cargo moving between Europe, Asia and the Middle East.

Transshipment cargo, which accounts for about 70 per cent of volume moving across its docks, grew a comparative 24 per cent last month to 124,067 teu.

Throughput for the month reached 182,068 boxes, up 17.5 per cent year on year.



Hutchison linked to port bid