August 14, 2007 (LBO) – Sri Lanka’s state-owned Ports Authority (SLPA) is planning an international bond issue to raise funds for new expansion projects and repay debt, its chairman Saliya Wickramasuriya said. “The inescapable fact at the moment, the most important thing to the port at the moment, is the ability of a bidder to ramp up cargo throughput in the port in the shortest possible time to maximum capacity and ensuring the highest annual income for the port throughout the life of the concession.” The authority is making arrangements to get an international credit rating before making a bond issue to raise funds, he told a shipping conference organised by the Sri Lanka branch of the Institute of Chartered Shipbrokers last week.
“In order to explore the possibility of debt swapping via an international bond issue we have completed a credit assessment with Fitch Rating,” he said.
“We plan to expand this internationally into a full blown international credit rating over the coming months which may allow us access to bond markets.”
The decision to go ahead with a bond issue would depend on the cost of debt at the time.
But it may enable the SLPA to derive “some efficiencies fiscally,” he said.
Wickramasuriya said the SLPA is the largest foreign exchange earner in the country making a net contribution to the government’s consolidated fund to the tune of around four billion rupees annually.
While it has the financial resources to undertake many of its own projects it also has the responsibility of repaying loans taken for previous projects.
“We bear the brunt of the cost for all our port projects including having to repay the remaining yen loans from the mid-1980s given by Japan for the construction of the Jaya Container Terminal (JCT).”
The JCT, Colombo’s main deepwater container terminal, was built with Japanese aid.
Colombo port carries a debt burden to the tune of 1.5 billion dollars in addition to its operating costs, Wickramasuriya said.
Most new port projects planned in Sri Lanka, apart from the new south port of Colombo, would not generate immediate commercial returns.
However, they were important from the point of view of the national economy as they would generate many spin off benefits to the rest of the economy, particularly under-developed regions of the island.
These projects were seen as public interest infrastructure development projects, especially helping to develop rural areas, Wickramasuriya said.
The SLPA is currently evaluating bids from international port operators and shipping lines to build and operate the first container terminal in the planned new south port of Colombo, next to the existing one.
Wickramasuriya said the SLPA would be seeking a partner who can ramp up the container transshipment business in the shortest possible time and generate improved cash flows for the port authority.