Sri Lanka - Colombo Port Efficiency Improvement Project

Report No. PID6733 Project Name Sri Lanka-Colombo Port Efficiency... Improvement Project Region South Asia Sector Infrastructure Project ID LKPA44886 Borrower Government of Sri Lanka (GOSL) Beneficiary Sri Lanka Ports Authority (SLPA) Responsible Agency SLPA Date Prepared August 21, 1997 Projected Appraisal Date July 17, 1998 Projected Board Date February 1, 1999 Background. The Government of Sri Lanka is committed to turn Colombo Port into a world class port and exerting concerted efforts with IDA's assistance to substantially raise the port's competitiveness. This means achieving the highest industry standards in service and customer satisfaction. Increasing the port's competitiveness and reduction of the cost of handling cargo would clearly benefit the economy by capturing a greater part of the substantial container traffic growth projected for Asia and improving the financial returns of on of Sri Lanka's key business link to the world economy. Project Objectives. The objectives of the project are to (i) assist SLPA in improving its efficiency, reliability and timeliness in provision of its services; (ii) capture a greater share of the container transshipment market, thus improving the revenue generating capabilities of SLPA in particular and of the Sri Lankan economy in general; (iii) improve the port safety and enhance its environment. Project Components and Estimated Costs. The Project's estimated total cost is US$ 76 million in 1997 prices, including contingencies. The project would include: (A) A Policy Component to enhance private sector participation; rationalize the labor force; and develop a corporate plan and establish an appropriate regulatory oversight; (B) Safety and Environmental Component which includes replacement of obsolete floating craft including a dredger; provision of shipwaste collection and disposal facilities; (C) Trade Facilitation Component which includes introduction of EDI and MIS systems; and provision of a customer service building; and (D) Technical Assistance and Training Component. Rationale for Bank Involvement. The project design and implementation will be based on the previous Bank experience in Sri Lanka. The cross country experience of the Bank on port privatization provides insights of ways to prepare the ground work required for corporatization and improve the returns of the port assets. Project Financing. The proposed IDA credit would finance a portion of the total project cost. IDA's funds would finance eligible expenditures,  excluding taxes and duties. Institutional and Implementation Arrangements. The project will be implemented by SLPA in collaboration with the GOSL. SLPA has some core competencies for project implementation but it would need strengthening in areas of policy, planning, and finance. In order to strengthen these capabilities the project would provide technical assistance. Sustainability. The sustainability of the project depends on the committment of the GOSL and SLPA to maintain the policy reforms once in place and working. Strong indications that this will prevail and monitoring of the project during and after implementation would support that committment. Benefits and Risks. The main benefits are: lower ocean freight costs for imports and exports from lower labor costs, increased containerization, reduction in inter-terminal transfer costs and lower unofficial incentive charges; and increased foreign exchange earnings from substantial growth of international transshipment cargos as a result of more efficient container and marine operations; and increased returns as a result of corporatization and increasing private sector participation. Managing Division Infrastructure Sector Unit, South Asia Region Team Task Leader Ismail Mobarek Tel: 202-458-2947 Contact Point: The InfoShop The World Bank 1818 H Street, N.W. Washington, D.C. 20433 Telephone No. (202)458 5454 Fax No. (202) 522 1500 Note: This is information on an evolving project. Certain activities and/or components may not be included in the final project. Processed by the InfoShop week ending August 14, 1998. - 2 -