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Sri Lanka’s First Successful Public–Private Partnership: South Asia Gateway Terminal, Port Expansion and Maritime Development for the Future

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The South Asia Gateway Terminal (SAGT) represents Sri Lanka’s first large-scale, durable, and demonstrably successful Public–Private Partnership (PPP). Conceived in the mid-1990s and implemented amid intense political, labour, and security challenges, SAGT fundamentally altered the trajectory of the Port of Colombo and laid the foundation for all subsequent private-sector participation in Sri Lanka’s port sector.This article is written from the perspective of one who participated in the negotiations, from the inception, and having served as Chairman of the Sri Lanka Ports Authority (SLPA) during this critical period. It documents the human and institutional challenges faced, the financial architecture of the PPP, its long-term profitability to the State, and the broader strategic lessons for Sri Lanka’s future as a maritime hub.

Thrown into the Hot Seat at SLPA

I was thrust into the hot seat at the Sri Lanka Ports Authority in the mid-1990s, amid a major industrial and political crisis. The proposed expansion of the Queen Elizabeth Quay (QEQ) through a private-sector partnership was widely perceived by port workers, engineers, and trade unions as an attempt to privatize the Port of Colombo. A midnight meeting with the Minister of Ports was followed almost immediately by strike action, paralyzing port operations.

Together with the late Minister M.H.M. Ashraff, I as Chairman embarked on an unprecedented program of engagement with nearly 17,000 strongly unionized SLPA employees. We chose dialogue over confrontation. Detailed explanatory flyers were circulated, and a series of meetings were conducted across every department and operational section of the 103-hectare Port of Colombo.

One meeting remains indelibly etched in my memory. I walked alone into the old ‘Boat House’, a dark and dingy building packed with hundreds of angry workers. Ignoring my driver’s warnings, I climbed onto a table when asked and was confronted with the question: “සභාපති තුමා, මොකද අපේ වරාය විකුණන්නේ? දැන් අපට කියන්න.”

I explained that SAGT was not a sale but a long-term lease — “කල්බද්දක් පමණයි” — akin to renting out one room of a very large house. I assured them that port security, pilotage, and navigational control would remain with SLPA, and that no employee would be retrenched. After more than two hours of intense questioning, the workers responded: “සභාපති තුමා, මෙය ඉදිරියට ගෙන යන්න.” As I was escorted back to my car, they wished me “ජය වේවා.”

Overcoming Institutional Resistance

Resistance was not confined to the shop floor. Sections of senior management were deeply uncomfortable with change, fearing loss of influence and exposure to global benchmarks. In frank one-to-one discussions, I reminded them that building fences to keep others out would trap us inside if a fire broke out. Productivity, technology, and performance-linked rewards were opportunities, not threats.

SLPA possessed a strong cadre of engineers, pilots, and operations specialists. By building trust, breaking silos, and fostering a unified institutional ethos, we aligned the organization behind a shared vision of reform and growth – I started playing badminton with all of them.

Why SAGT Was Strategically Necessary

By the mid-1990s, the Queen Elizabeth Quay had reached its container-handling capacity, handling only about 250,000 TEU annually. Regional ports were expanding rapidly, investing in deeper drafts, modern cranes, and advanced systems. Without decisive action, Colombo risked losing its emerging hub status.

The SAGT proposal aimed to deepen the quay to 15 meters, modernize infrastructure, and increase capacity to one million TEU, with an investment of approximately US$240 million — capital that the State could not realistically mobilize at the time.

Negotiating the SAGT PPP

The proposal was submitted by a consortium comprising P&O Containers (UK), John Keells Holdings, and P&O Australia under a Build–Operate–Transfer (BOT) model. The initial terms were heavily skewed in favour of the investor: a fixed annual ground rent of US$2 million, a 7.5% equity stake for SLPA, and a 50-year concession.

Drawing on my experience in international shipping and project finance, and while serving concurrently as Chairman of the Ceylon Shipping Corporation, I participated in negotiations from their inception. Through sustained and, at times, difficult negotiations, SLPA’s equity stake was doubled to 15%, the concession period was reduced to 30 years, and multiple additional revenue streams were secured.

At the designed throughput of one million TEU, SLPA’s income from the SAGT concession was projected at approximately US$26 million per annum by the sixth year of operation, while the consortium projected a return on investment of around 20%.

Role of Political Leadership

The success of SAGT would not have been possible without strong and consistent political leadership. President Chandrika Bandaranaike Kumaratunga (CBK) played a pivotal role in championing foreign direct investment at a time when Sri Lanka was engulfed in a brutal internal conflict. Her steadfast support provided policy continuity, investor confidence, and institutional backing for the PPP framework.

Equally significant were the leadership of the late Minister M.H.M. Ashraff, whose ability to engage stakeholders, manage political risk, and defend reform was critical to steering the project through turbulent waters, and the role of BOI/BII, led by Thilan Wijesinghe & Mano Nanayakkara.

During CBK’s Presidency, 40 per cent of Sri Lanka Telecom shares were sold in 1997 to the Japanese Nippon Telegraph and Telephone Company (NTT), along with Management control, whilst 40 per cent of SriLankan Airlines shares were sold to Emirates in 1998, along with Management control.

All three initiatives were highly successful and delivered significant benefits to the country.

SLPA Profitability and PPP Contribution

The above analysis demonstrates that SAGT- and CICT-related operations contribute over US$100 million annually to SLPA, accounting for the bulk of its profitability. In contrast, the remainder of SLPA’s operations generate significantly lower returns, underscoring the strategic importance of well-structured PPPs.

SAGT’s Operational Excellence and Capacity Doubling

Although SAGT was originally designed to handle approximately 1.1 million TEU annually, the terminal has consistently exceeded its design capacity. Through continuous investment in equipment, technology, and human capital, SAGT has successfully handled nearly 2 million TEU per annum—nearly double its original design capacity.

This achievement places SAGT among the most productive container terminals in the world, measured by TEU per hectare of yard space. The terminal’s performance has been instrumental in sustaining Colombo’s position as a premier transshipment hub in South Asia and the Indian Ocean.

The consortium’s local partner was John Keells Holdings (JKH), a leading conglomerate. Under the leadership of the late Ken Balendra, then Chairman, and Susantha Ratnayake, who at the time headed the Transportation sector of JKH and subsequently became the Chairman, they brought together P&O Containers (UK) and P&O Australia as partners for this project. This was an achievement in itself, given the economic and security challenges the country faced due to a protracted terrorist conflict that had been raging since 1984.

The success of this venture has undoubtedly contributed significantly to the JKH Group’s overall profitability since its inception and, importantly, improved Colombo Port’s performance and standing in the maritime industry.

SAGT remains Sri Lanka’s first and most successful PPP not merely because of private capital mobilization, but also because of disciplined contract design, balanced risk sharing, stakeholder engagement, and political resolve. The SAGT terminal has played a pivotal role in transforming the Port of Colombo, contributing to its growth and development.

Port Expansion – using the PPP Structure and formulae

Changes made to SLPA Master Plan in 1997 to create the New South Port of Colombo providing an additional capacity of TEU 10 million has been achieved taking POC capacity to 15 million TEU. SLPA is on course to extend WCT1 breakwater to accommodate the WCT 2 terminal, paving way to build inside ECT 2 and SAGT 2, adding 10 million TEU, taking the POC to 25 million TEU in the medium term. North Port expansion providing another 15 million TEU – capacity to 40 million TEU in the long term, enabling Sri Lanka to earn US$ 4 billion annually.

Maritime Development Strategy

It is proposed to transform Sri Lanka’s Maritime Corridor into a Carbon-Neutral Gateway for Global Trade via the Sri Lanka’s Multi-billion Dollar Ocean-Air Expressway (SLiMDOE) Carbon Capture & Utilization (CCU) Initiative as a Public Private Partnership (PPP).

Sri Lanka occupies a uniquely strategic position in global commerce, with over 60,000 ships transiting its Exclusive Economic Zone (EEZ) annually through the SLiMDOE Corridor—a 500-nautical-mile ocean-air passage south of the island that carries 40% of world trade.

While this corridor enables vast global economic efficiency, Sri Lanka bears the environmental cost of concentrated maritime and aviation emissions without receiving any direct economic benefit.

The proposed SLiMDOE Carbon Capture & Utilization (CCU) Initiative seeks to establish a Carbon Capture and Conversion Zone (CCCZ) centered on Hambantota Port—integrating ship-based carbon collection systems with shore-based liquid CO₂ storage and conversion infrastructure. Captured CO₂ will be transformed into commercially valuable products such as synthetic fuels, cement additives, and industrial carbonates. detailed in my publication (ISBN 978-624-99952-8-4, © 2025 Ranjith J. Wickramasinghe.).

This initiative offers triple benefits:

• For Sri Lanka: Foreign direct investment (US$2–3 Billion), job creation, climate finance inflows, and positioning as Asia’s first maritime carbon-neutral EEZ hub. The PPP at Hambanthota has the potential to convert 50 million tons of CO2 earning US $ 8 million annually in the medium term.

• For the global shipping industry: A cost-effective, in-transit solution for emissions mitigation and compliance with emerging IMO standards, and a return on investment from the PPP shareholding.

The writer was a former Chairman of Sri Lanka Ports Authority and Ceylon Shipping Corporation, and a pioneering member associated with corporatizing of Ceylon Shipping Corporation and the acquisition of Sri Lanka’s first Liner Ship Mv Lanka Rani in 1971. He also provided his expertise in finance, planning and sourcing of funds internationally as an Expatriate to Zambia Consolidated Copper Mines Limited one of the largest world producers of Copper and Cobalt, a Company Listed in the New York Stock Exchange during the eighties and early nineties. Upon returning to Sri Lanka on invitation the Ceylon Shipping Corporation was bestowed as a Star Performer in Liner Services during his Chairmanship in the mid-nineties, and was instrumental in bringing back the crippled ship MV Lanka Muditha aftermath of a deadly suicide attack by LTTE inside the Trincomalee harbour, and putting back the vessel to operations in three months. His contribution to Port Development has been detailed above. He is the concept author of SLiMDOE, detailed in his website www.ranjithwickramasinghe.com and is advocating the harnessing the strength of SLiMDOE Leverage to Rebuild Sri Lanka. He is presently the Chairman of SLiMDOE (Private) Limited, and qualified as a FCMA (UK), FCCA, ACC.Dir.SL, CGMA, and a JP.

By Ranjith Wickramasinghe ✍️



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Features

Trump’s tariffs, AKD’s gazette and Sri Lanka’s diplomatic slumber

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“We are rather respectable in Colombo. We go to bed fairly early, and we remain there till morning. “

According to Sri Lanka’s diplomatic folklore, the late S.W. R. D. Bandaranaike uttered these words while explaining the reasons for Sri Lanka’s abstention on the UN resolution condemning the Soviet invasion of Hungary. Apparently, SWRD’s foreign ministry officials were asleep at home when the diplomatic cable seeking instructions was received from New York. In those days, there were no cell phones, Internet, or even fax or telex machines. The diplomatic cables were sent through post offices. Decoding them was a slow and time-consuming process. Thus, the government could not provide appropriate instructions to our mission in New York in time, and the Sri Lankan delegation abstained on that sensitive UN vote.

Sri Lanka’s Absence from Section 301 Consultations

But then, how does one explain Sri Lanka’s absence from the crucial bilateral consultation held in Washington by the Office of the United States Trade Representative (USTR) during March-April on “Forced Labour” under the Section 301 of the US Trade Act of 1974? Didn’t our foreign and trade ministries send appropriate instructions to Washington in time? Even if the instructions from the foreign ministry were transmitted to our embassy in Washington by pigeon carriers, there was enough time for Sri Lanka to participate in those meetings.

In March, the USTR initiated these 301 investigations on 60 trading partners, and invited all of them for confidential consultations. Out of the 60, 46 participated in these consultations. Sri Lanka was not one of them. Other countries that didn’t participate in these consultations included China, Russia, and Venezuela! In addition to that, the Section 301 Committee conducted a public hearing with interested parties on April 28 and 29. Washington-based diplomats, representatives from few trade ministries as well as representatives from many foreign trade associations and chambers participated in these hearings. Sri Lanka was once again conspicuously absent.

As a result, when the USTR published the proposed forced labour tariffs on June 2nd, Sri Lanka ended up with a 12.5% duty. Pakistani and Indonesian diplomats participated in these consultations and took appropriate follow-up measures, and managed to enter the 10% duty category. As even a threat of a modest tariff hike could disrupt supply chains and reduce competitiveness, particularly in an industry such as garments, I discussed this issue on 15 June and underscored the importance of Sri Lanka’s participation at the next hearing, which was scheduled to be held from July 7th .

Awakening from Diplomatic Slumber and AKD’s Gazette

Fortunately, Sri Lanka finally awoke from weeks of diplomatic slumber, and Ambassador Mahinda Samarasinghe participated in the public hearing on 9 July, and promised, “…. · We have agreed to the text in our negotiations with the USTR on forced labour, …. The gazette as we speak is being printed and I’m getting the gazette tomorrow morning, and the gazette will be shared with USTR as I get it“.

As promised, President Anura Kumara Dissanayake issued a gazette on 10 July banning the imports of goods produced by forced labour. These new regulations are very similar to what Pakistan and Indonesia enacted in April, after their consultations with USTR in March. Why couldn’t we do it in April? Why did we wait till the very last minute?

Challenges ahead

“War is too important to be left to generals alone,” is a famous saying attributed to former French Premier Georges Clemenceau. Similarly, monitoring our main markets is too important to be left to diplomats alone. The United States is the largest single-country market for Sri Lanka. Therefore, Sri Lankan trade chambers and associations should become more proactive in these markets and participate in these events. For example, the chairman of the Pakistani apparel exporters association participated in the April hearings. Similarly, representatives from the Indian Agricultural and Processed Food Products Export Development Authority, the Federation of Indian Chambers of Commerce and Industry, the Confederation of Indian Industry, and Reliance Industries also participated in July hearings. At an event where each speaker is given only five minutes (strictly enforced), having a number of speakers from a country is an advantage. The presence of industry representatives in these kinds of events also help them understand the market dynamics and the future challenges. This is important, particularly because there will be many more challenges with Trump’s tariffs.

With the gazette issued on 10 July, Sri Lanka has imposed a prohibition on the importation of goods produced with forced labour. Now, the challenge will be to effectively enforce the prohibition. And what are the goods produced with forced labour? The USTR list only focuses on aluminum, cotton, electronics, lithium-ion batteries, rice, and tobacco. However, according to the U.S. Department of Labour, the list is much longer. Hence, this list may change continuously during the next two years and tariffs may fluctuate once again.

So, this is definitely not the time to slumber.

(The writer, a retired public servant, can be reached at senadhiragomi@gmail.com)

by Gomi Senadhira ✍️

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Tales of Mystery and Suspense 10 Casino for Sale

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After the overwhelming grotesquerie of J K Rowling’s latest Cormoran Strike novel (written, I should have noted, as the others were, under the pseudonym Robert Galbraith), I thought I should return to the world of fun, and also a much shorter description since this thriller moves quickly without the layers of detail that Rowling engages in.

I then move to the second comic thriller by Caryl Brahms and S J Simon. This, their second story to feature Vladimir Stroganoff and Adam Quill, was Casino for Sale, as lunatic a romp as the first, though without the emphasis on the ballet that characterized A Bullet in the Ballet.

This one begins with the impresario Stroganoff buying a casino cheap from Baron Sam de Rabinovich, only to find that it was a rundown place, not the grand casino of La Bazouche, a resort on the Frenc+h Riviera, as he had initially thought. The grand one belonged to Lord Buttonhooke, and Stroganoff could  not compete, until he thought of bringing the Ballet Stroganoff to the casino – which of course leads to Buttonhooke deciding to have ballet performances in his Casino too.

Stroganoff invites Quill to visit him, which Quill decides to do since he has left Scotland Yard, having come into a legacy. No one believes this, and he has to face questions as to what he did to have been sacked, with sympathy for having been found out.

Caryl and Simon

The day he arrives in La Bazouche there is a murder, of a vitriolic critic called Citrolo, in Stroganoff’s office. He had been going to write a damning review of the opening night of the ballet and Stroganoff, when he realizes Citrolo cannot be swayed, drugs him and dictates the review himself to the papers. He leaves Citrolo sleeping and finds him shot the next morning, whereupon he decides to muddy the waters and leave a suicide note and lots of other murder weapons. So much overkill, as it were, of course ensures that he is arrested.

But the excitable French detective who makes the arrest follows up his suggestion that Buttonhooke was also involved, and so the two casino owners find themselves in cells next door to each other, with the detective Gustave quite happy to provide creature comforts for a fee.

Quill decides he must investigate, and finds Gustave most cooperative, since he has a laid back attitude to work. So it is Quill that finds a notebook which makes it clear Citrolo is an accomplished blackmailer, and that there are lots of possible murderers, including Stroganoff’s croupier, who was crooked, Rabinovich, who was now working for Buttonhooke, a confidence trickster called Kurt Kukumber, whose prospectus for a dud gold mine was found in the office and Prince Alexis Artishok who was engaged in a deal to buy diamonds from the ballerina Dyra Dyrakova.

Stroganoff had been trying to get Dyrakova to dance for him, but having done so previously she had refused. But then to Stroganoff’s chagrin she agreed to dance for Buttonhooke. The clearly crooked Artishok had told Buttonhooke’s mistress Sadie Souse, who was not very bright, that Dyrakova possessed diamonds she was willing to sell cheap, and Sadie was determined to have them.

Quill meanwhile finds out that there was a secret passage to Stroganoff’s office, the obvious solution to what had begun as a locked room mystery, and that this was known by almost everyone apart from Stroganoff himself. And then Rabinovich is murdered, just after Gustave had released his two original suspects, leading him to blame Quill for having insisted on that and thus allowing them to kill again.

Soon afterwards Dyrakova arrives, and the town is full of posters announcing that she will appear in the casinos, elaborate posters for either one, since Stroganoff is determined that she will dance for him, and if she does not come willingly, he has devised a scheme to make her do so unwillingly. So, though Buttonhooke has her taken off to his yacht immediately she arrives at the station, Quill along with Arenskaya gets her into a launch and to Stroganoff’s casino, where she performs to tumultuous applause, not knowing for whom she is dancing.

When Quill asked her about the diamonds, she said she had sold them long ago, and that gave Quill the solution to the mystery. Rabinovich had known about this, and Artishok had killed him to prevent Sadie learning it from him, he had killed Citrolo who had recognized him for an accomplished card sharper, not a Russian prince at all. But before he is arrested, he gets away in a boat, and the police launch that pursues him is on the point of catching him up when it runs out of petrol.

Again, lots of excitement, and entertaining references  – Gustave grows marrows – and if not quite as brilliant as its predecessor, Casino was certainly a delightful read.

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The challenge of being positive about SAARC

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The RCSS forum addressed by SAARC Secretary General Ambassador Md. Golam Sarwar in progress. (Pic courtesy RCSS)

It was a few years back that a former President of Sri Lanka took it on himself to pronounce SAARC ‘dead’. Since then there have been other sections of Sri Lankan opinion that have joined the critics of SAARC and taken the solemn stance that SAARC has indeed died what may be called a natural death.

Their fatalism is understandable. SAARC has failed to meet at heads of government or state level for the past several years to take the SAARC process notably forward. Regional cooperation has more or less been only an appealing idea. No substantive concrete projects have taken off to make the idea a hard reality. ‘Inner paralysis’ seems to be SAARC’s lot. Hence the fatalism in these circles.

However, being one of the worst cash-strapped regions of the world and a teemingly populated one with people virtually left to their devices, what choices do the ‘SAARC Eight’ have other than to try their best to band together and continue with their cooperation efforts, however small they may be?

There is no escaping the mounting debt trap for many of these countries and bankrupt Sri Lanka is a glaring example, but ‘throwing in the towel’ and abandoning themselves entirely to the diktats of the strongest economies and their agencies will prove a ‘living death’ for many countries in the SAARC fold.

The gains may be meagre but giving-up on SAARC cooperation in full would prove self-defeating for the organization and South Asia. Right now, the collective intention ought to be to salvage what the region could from the tenuous cooperative efforts. Moreover, such initiatives could go some distance to generate a degree of goodwill among the Eight and help in sustaining a dialogue process.

Given this backdrop it proved ‘a stich in time’ for the Regional Centre for Strategic Studies (RCSS), Colombo, to recently host the SAARC Secretary General Ambassador Md. Golam Sarwar to a round table discussion on the unifying potential of SAARC and its future possibilities, besides other related issue areas.

Held on June 24th and moderated by RCSS Executive Director and former ambassador Ravinatha Aryasinha, the forum brought together a vibrant, wide ranging audience comprising academicians, diplomats, senior public servants, civil society activists and many others. Following the presentation by Ambassador Golam Sarwar titled, ‘Reigniting SAARC: Achievements, Challenges and the Way Ahead’, a lively Q&A followed.

The above forum could be described as an act of lighting the proverbial ‘candle’ rather than ‘cursing the darkness.’ It surely is a ‘darkness’ that could be seen as daunting considering that the region’s pivotal powers, India and Pakistan, are failing to act in a spirit of accord but are engaged in bitter finger-pointing on a number of questions of vital importance to SAARC.

On the other hand, what is the rest of the region doing to bring the above sides together? It is disappointing that to date the rest of SAARC has failed to launch a major diplomatic drive to bring peace between the feuding regional heavyweights. It needs to act without delay and establish its earnestness and this effort would need to prove SAARC’s staying power in the unfolding months and even years.

In assessing SAARC’s seeming failure local opinion in particular has failed to factor in what could be described as weak leadership. Since Sheikh Mujibur Rahman of Bangladesh, the founding father of SAARC, the region has failed to produce a visionary leader who could advance the SAARC cause with charisma and drive.

Among other reasons, weak leadership accounts considerably for the faltering and stuttering status, as it were, of SAARC. Badly needed are leaders who could go the extra mile, think less of narrow national interests and work diligently towards the collective well being of the region but SAARC’s millions of ordinary people have been made to wait in vain for leaders of such stature. Instead, they have been burdened with politicians who seem to be relishing the apparently moribund state of SAARC.

Looking back, it could be said that it was the dynamic leadership factor that led to the launching of the Non-Aligned Movement and for its sustenance for a few decades. True, it could be seen in some quarters that NAM is no more, but as in the case of SAARC, the former too has been unfortunate to be burdened over the years with politicians who lack the vision and drive to unflaggingly advance the fortunes of the South. NAM and SAARC lack the dynamism and vision of leaders of the stature of Jawaharlal Nehru, for example, to give them the required guidance and intellectual depth.

The reasons are complex for there not being among us currently political leaders with the vision and the steadfast commitment to advance the legitimate interests of the South. However, it could be stated with conviction that the majority of Southern leaders have too easily caved in to the demands of the global North and its financial agencies.

These leaders have failed to see, for instance, that the largely market economy oriented Northern governments would not view with favour a centrist economic model that attaches priority to the interests of the dis-empowered publics of the South. This realization ought to have dawned on the current government in Sri Lanka, for instance, some while ago but it has no choice but to abide by IMF dictates since economic survival at present is unthinkable without the latter’s succour.

Accordingly for SAARC this should be the time for some soul-searching. Priority needs to be attached to ending the feuding between India and Pakistan since at present the material fortunes of the region hinge largely on these regional giants giving peaceful relations among them a try. This is no easy challenge to meet but some daring, visionary diplomacy needs to take hold among the rest of SAARC.

There is some sense in SAARC bringing the peoples of the region together through programs that address their best collective interests. A meeting of minds among SAARC nations could enable SAARC and its agencies to build a region-wide people’s movement for progressive political and economic change that could in turn lead to the region’s political leaders sensitizing themselves more to the neglected needs of their publics.

However, the time is ‘now’ for the initiation of these progressive changes and the voice of SAARC well wishers would need to drown out those of their critics.

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