Sri Lanka plans to develop Trincomalee port as industrial hub, stirs global interest

2 June 2022

Sri Lanka’s announcement that it plans to turn Trincomalee into an “industrial haven” and will soon call for tenders to do so could lead the economically beleaguered country to lease a couple of thousand hectares of land for special economic zone businesses and development strategically located port, fueling geopolitical interest in this part of the Indian Ocean.

“In fact, we are planning to apply for an expression of interest (EoI) to develop the Port of Trincomalee as an industrial port. That is, we will ask not only from one side, but also from those industrialists who want to come and use the port premises. We have a large land area, about 2,400 hectares, that surrounds the port of Trincomalee,” Prasanta Jayamanna, chairman of the Sri Lanka Ports Authority, said on Tuesday.

buy now | Our best subscription plan now has a special price

Jayamanna spoke with representatives of shipping companies and port workers’ unions to allay fears of a slowdown in cargo handling at the Port of Colombo – a major regional transshipment hub – due to a lack of foreign exchange, which has led to fuel shortages and reduced supplies. chains.

The Trincomalee Industrial Harbor Proposal is a longstanding plan to monetize land owned by the Sri Lanka Port Authority by attracting foreign and local investment to create a special economic zone, industrial park or energy hub.

It will also entail the development of a port for the transport of non-containerized goods such as cement, coal or other industrial raw materials.

“In the near future we plan to call for EoI. We planned to do it in April, but postponed until the situation develops. [improved]because we expect many local businesses to also come and invest in the port,” Jayamanna said.

Jayamanna made similar remarks in January this year. It is not yet clear when the SLPA will act in accordance with its intentions. India, which has already invested heavily in Trincomalee, is likely to be interested in the proposal both as a commercial project and as a strategic investment, a source in Sri Lanka said.

Earlier this year, Lanka Indian Oil Company, a subsidiary of Indian Oil Company, and Ceylon Petroleum Corporation signed an agreement to build a massive oil storage tank farm built during British rule in Trincomalee. The oil storage is located in the harbor and has its own berth. The two companies have formed a special purpose joint venture called Trinco Petroleum Terminals Ltd to develop 85 tanks, all of which are dilapidated.

Trincomalee already has several dedicated port terminals – in addition to the IOC facility in Lanka, it has a Tokyo Cement facility, a grain complex for a flour mill, and a tea terminal. There is also a berth for bulk cargo such as coal, gypsum and cement.

In addition to India, the development of the port of Trincomalee has attracted the interest of several countries, including Japan and the United States. It offered not only one of the best natural harbors in Asia, but was also seen as a way to balance China’s influence in the country and dominate the maritime trade routes in the region through its participation in the container port of Colombo and the port of Hambantota. for cargo. Japan commissioned ADB in 2020 to study the development of the Port of Trincomalee.

There have been questions about whether Sri Lanka needs more than one port, especially as Hambantota, which was developed with Chinese financial assistance as a cargo port, failed to take off and its operations remained below forecasts.

However, an ADB study concluded that Trincomalee Harbor, located on the east coast of Sri Lanka, with its key benefits of “natural depth, refuge, unique tourist spots and extensive land for industry and logistics in close proximity to the port” is ideally suited to serve the projected growth in maritime freight trade in the region, especially with regard to port development in Bangladesh and Myanmar, as well as on the east coast of India.