The President of the Asian Development Bank (ADB), Takehiko Nakao, who was on a 2-day visit to Sri Lanka last week, pledged to scale up operations in the island with an aim to provide over US$2 billion in loans and equity in 2016 through 2018 compared with $1.5 billion in the preceding three years.
During his visit, the ADB Chief said the Bank will provide $100 million through innovative bank auctions to help channel more funds to smaller Sri Lankan firms that struggle to access the finance they need to grow. The ADB funds will be lent to banks who will then lend the funds to small- and medium-sized enterprises (SMEs). To access the funds, however, banks will need to bid for a specific amount of the finance at a specific interest rate at each $12.5 million auction to be held eight times over the coming 4 years.
Meanwhile, the ADB and Sri Lanka Ports Authority (SLPA) also signed a transaction advisory services agreement to develop the East Container Terminal (ECT) of Colombo Port through public–private partnership (PPP).
“The terminal will maintain Colombo Port’s strategic position as a key trans-shipment hub for global and regional trade,” said Sri Widowati, ADB’s Country Director for Sri Lanka. “The project will bring leading operations and technology from the private sector to improve the port’s value proposition to global shipping lines and increase its market share in the global trans-shipment market.”
The $500 million project will include operationalization of the existing 400 meters of deep water berth and the full design, build, finance, operation, and maintenance of the remaining 800 meters of berth. The concession for the ECT is likely to be for 35 years.
SLPA has already invested $80 million in construction of the 400-meter berth at the terminal. ADB also provided a $300 million loan in 2008 to support the construction of the breakwater of the Colombo Port.
“ADB will advise SLPA in developing a bankable PPP structure and organizing a competitive tender process to select the private sector partner,” said Ryuichi Kaga, Head of ADB’s Office of Public-Private Partnership (OPPP).
=“A transparent competitive tender process is expected to deliver the best value for SLPA for the construction and operations of the terminal and can help create a new template for structuring and delivering PPPs in Sri Lanka.”