SAARC REGIONAL

MULTIMODAL TRANSPORT STUDY

(SRMTS)

FINAL REPORT

COUNTRY REPORT

FOR

SRI LANKA

Amal S. Kumarage

Professor, University of Moratuwa, Sri Lanka

April 2006

TABLE OF CONTENTS

1 COUNTRY PROFILE ______1

1.1 Geography ______1

1.2 Population ______1

1.3 Economy ______1

1.4 Trade ______3

1.5 Tourism ______7

1.6 Transport ______8

1.6.1 Early Development of Transport ______8

1.6.2 Inland Waterways ______8

1.6.3 Land Transport ______9

1.6.4 Current Land Transport Activity ______9

1.6.5 Ports ______10

1.6.6 Airports ______11

1.6.7 Transport Map ______11

2 PROFILE OF CORRIDORS/SECTORS ______13

2.1 Aviation Sector ______13

2.1.1 Aviation Gateways in SAARC Region ______14

2.1.2 Air Services Agreement between Sri Lanka and India ______16

2.1.3 Air Services Agreement between Sri Lanka and Maldives ______17

2.1.4 Air Services Agreement between Sri Lanka and Pakistan ______17

2.1.5 Air Services Agreement between Sri Lanka and Bangladesh ______18

2.2 Maritime Sector ______19

2.3 Road Corridors ______23

i 2.4 Rail Corridors ______25

2.5 Inland Waterway Corridors ______26

2.5.1 Talaimannar- Rameshwaran ______26

3 PROFILE OF GATEWAYS ______29

3.1 Airports – Description of Airport Sector and Policies ______29

3.1.1 Bandaranaike International Airport (Colombo) ______29

3.2 Seaports – Description of Port Industry ______30

3.2.1 Port of Colombo ______30

3.2.1.1 Terminals, Berths, Quays & Other Facilities ______30

a) Jaya Container Terminal (JCT) ______31

b) South Asia Gateway Terminals (SAGT) ______32

c) Unity Container Terminal (UCT) ______32

d) Bandaranaike Quay ______33

e) Feeder Berth ______33

f) Prince Vijaya Quay ______33

3.2.1.2 Other Facilities ______33

3.2.2 Port of Galle ______34

3.2.3 Port of Trincomalee ______35

4 RELEVANT CONFIRMED SECTOR DEVELOPMENTS ______36

4.1 Aviation______36

4.2 Maritime ______37

4.3 Rail ______40

4.4 Road ______40

4.5 Ferry Transport ______41

ii 5 ISSUES/CONSTRAINTS TO INTRA-REGIONAL TRANSPORT ______42

5.1 Aviation______42

5.1.1 Infrastructure ______42

5.1.2 Services ______42

5.1.3 Qualitative Responses ______44

5.2 Maritime ______45

5.2.1 Infrastructure ______45

5.2.2 Services ______46

5.2.3 Industry Responses ______46

5.3 Ferry Transport ______47

5.3.1 Infrastructure ______47

5.3.2 Services ______48

5.4 Land Transport ______48

6 TRAFFIC FORECASTS ______49

6.1 Aviation______49

6.1.1 Passenger – Overall National ______49

6.1.2 Cargo – Overall National ______51

6.1.3 General Observations ______53

6.2 Maritime ______54

6.2.1 Overall Growth in Maritime Traffic ______54

6.2.2 Growth in Container Sector ______54

6.3 Ferry Transport ______55

7 National Development Priorities and Scheduling ______56

7.1 Aviation______56

iii 7.2 Maritime ______56

Appendix A: Data for Aviation Sector SAARC Regional Operations To/From Sri Lanka

Appendix B: Data for Maritime Sector SAARC Regional Operations To/From Sri Lanka

iv LIST OF TABLES

Table 1: Sri Lankan GDP (1990-2004) ______2

Table 2: The State of the Economy in 2004 ______3

Table 3: Trends in value of trade between Sri Lanka and the rest of the world ______5

Table 4: Sri Lanka’s External Trade with SAARC Countries (2000-2004) – Rs Million ___ 5

Table 5: Quantities Exported to SAARC Countries (2004) ______6

Table 6: Quantities Imported from SAARC Countries (2004) ______6

Table 7: Foreign tourist arrivals in Sri Lanka, 1990 – 2003 ______7

Table 8: Tourist Arrivals from SAARC countries (2000-2004) ______7

Table 9: Transport Modal Shares: Sri Lanka (2001) ______9

Table 10: Port Services (2003-4) ______10

Table 11: Regional Transport Corridors ______13

Table 12: Sri Lanka’s Air Service with SAARC Countries ______19

Table 13: Road Length and Road Density (2001) ______24

Table 14: Estimated Operational Vehicle Fleet (2001) ______24

Table 15: Passenger Traffic on Indo-Sri Lanka Ferry Service (up to 1984) ______26

Table 16: Potential for Ferry Services ______27

Table 17: Outline of Existing Airport Facilities ______29

Table 18: Estimated Capacity Requirements of Existing Facilities up to 2025 ______36

Table 19: Identified Port Development Projects ______38

Table 20: Summary of Infrastructure Requirements at BIA for year 2020 ______42

Table 21: Capacity of Existing Passenger and Baggage Handling Facilities ______43

Table 22: Summary of Facility Requirements for Passenger Terminal (2025) ______43

Table 23: Existing and Potential Enhanced Capacity of Existing Terminals (TEUs) ______46

v Table 24: Historic Air Passenger & Aircraft Traffic at Bandaranaike International Airport (1990-2004)______49

Table 25: Tourist Arrivals from SAARC Countries (2000-2004) ______50

Table 26: Forecast Results of Total Passenger Movements at BIA (2003-2013) ______51

Table 27: Total Passenger Demand (2006-2025) ______51

Table 28: Historic Air Cargo at Bandaranaike International Airport (1990-2004) ______52

Table 29: Forecast Results of Total Cargo Movements at BIA (2003-2013) ______53

Table 30: Total Cargo Demand (2004 to 2025) ______53

Table 31: Forecast of Domestic Container Traffic for Port of Colombo ______54

Table 32: Forecast of Transhipment of Container Traffic to the Indian Sub Continent ____ 55

LIST OF FIGURES

Figure 1: Transport Map of Sri Lanka ______12

Figure 2: SAARC Air Routes from Sri Lanka ______15

Figure 3: SAARC Maritime Routes from Sri Lanka ______22

vi PREAMBLE

Terms of Reference

At the 12 th SAARC Summit held in January 2004 in Islamabad, the Heads of State/Government emphasized the need to strengthen transportation, transit and communication links in the region for accelerated and balanced economic growth in the region. Therefore, it had been decided to conduct a comprehensive regional multimodal transport study with a view to developing the transport sector within the region in an integrated manner. As such, the SAARC Secretariat with financial assistance from the Asian Development Bank has initiated the SAARC Regional Multimodal Transport Study (SRMTS) in order to enhance transport connectivity among SAARC Member States to promote intra-regional trade.

The Inception Workshop for the SAARC Regional Multimodal Transport Study was held in June 2005 and the First Technical Coordination Meeting in August 2005 to discuss the framework for the study. The Second Technical Co-ordination Meeting for the SAARC Regional Multimodal Transport Study (SRMTS) to review progress, finalize the corridors, gateways and methodology was held also in Kathmandu from 17-18 October 2005.

Regional Study Team

The study team for the SRMTS included representatives from each of the seven SAARC countries comprising a Country Team from each country. The Committee meetings were attended by the respective country team leaders. The names and designations of the team leaders are as follows: Bangladesh Nepal Mr. M.A. Matin Taldukar Dr. Pushkar Bajriacharya, General Manager (East) Trade Analyst Bangladesh Railway Kathmandu Chittagong [email protected] [email protected]

Bhutan Pakistan Mr. Tashi Wangyal, Mr. Sajid Mansoor, Consultant, Deputy Chief, Ministry of [email protected] Communications [email protected]

i India Sri Lanka Mr. S.K. Mishra, Prof Amal S. Kumarage Director (Road Transport) University of Moratuwa Ministry of Road Transport & [email protected] Highways New Delhi [email protected]

Maldives Mr. Hussain Naeem, Chief Engineer, Maldives Port Authority, Male [email protected]

Sri Lanka Study Team

This report for Sri Lanka was compiled by the following team appointed by the Asian Development Bank, based on the nominations made by the Government of Sri Lanka and the SAARC Secretariat.

• Amal S. Kumarage, B.Sc. Eng.(Moratuwa), PhD (Calgary), FCILT (UK); AMIESL, Professor, Division of Transport Engineering, University of Moratuwa, Sri Lanka.

o e-mail: [email protected]

o telephone: (94) – 11- 264 6702

Professor Amal S. Kumarage, functioned as the Team Leader and was responsible for the writing up of the Aviation, Ferries and Land Transport sections and • P. Ramachandra, BSc(Eng), MSc (Cranfield), PhD (London), DIC,C Eng, MIE., Senior Lecturer, Department of Management of Technology, University of Moratuwa, Sri Lanka.

• e-mail [email protected]

• +94 777 418888

Dr Ramachandra was responsible for compiling the section of this report on Maritime. The maps were prepared by Ms. Pradeepa Jayaratne of the University of Moratuwa.

ii Acknowledgements

The Study Team gratefully acknowledges the excellent cooperation from a number of persons, including the following who at all times readily responded to request for information and provided other support required for the study. • Dr D.S. Jayaweera, Secretary, Ministry of Transport, Colombo; • Mr. C.A.H.M. Wijeratne, Acting Director General/SAARC, Foreign Ministry, Colombo; • Mr. Sunil Arsekularatne, Director Planning, Ministry of Railways, Colombo; • Mr. Priyal de Silva, General Manager Sri Lanka Railways, Colombo; • Mr. Wasantha Munasinghe, Suptd- Planning, Sri Lanka Railways, Colombo; • Mr. G.S. Withanage, Additional Secretary, Ministry of Ports & Aviation, Colombo; • Dr. Parakrama Dissanayake, Managing Director, Aitken Spence Shipping Ltd, Colombo; • Mr. W.W.M.A.S. Premakumar, Deputy Director, Sri Lanka Customs, Colombo; • Mr. O.J.S. Perera, Consultant, Airport & Aviation Services, Sri Lanka; • Mr Prasanna Weerasinghe, Consultant, Sri Lanka Ports Authority, Colombo; • Mr. H.M.C.Nimalsiri, Director General, Civil Aviation Authority, Colombo; • Mr. WG Samaratunge, Managing Director, Sri Lanka Ports Authority, Colombo; • Mr. Weerakoon, Director Merchant Shipping, Colombo; • Mr. K.D. Lasantha, Civil Aviation Authority, Colombo; • Mr. Gimhan Daberera, Civil Aviation Officer CAA, Colombo • Mr Gananathalingam, Consultant ( Retired Director of Customs); • Ms Anoma Abeywickrema & Dilki de Silva, Travel Club, Colombo; and • Ms. Pradeepa Jayaratne, University of Moratuwa.

The study team also acknowledges with gratitude the co-operation received from personnel of the SAARC Secretariat and the ADB who were in charge of this project, including: • Mr. Y.K.A. Rohanajith, Director, SAARC Secretariat, Kathmandu; • Mr. Anthony Bayley, Consultant, ADB, Manila; • Mr. Bishnu Pant, Regional Cooperation Specialist, ADB, Kathmandu; • Mr. Binod Karmacharya, Regional Cooperation Advisor, ADB Kathmandu; • Ms Pawitra Gurung, Administrator, ADB Kathmandu; and • Ms.Leileen Hamin, Senior Personnel Assistant, SAARC, Kathmandu.

The financial assistance received from the ADB for the compilation of this report is also gratefully acknowledged.

iii EXECUTIVE SUMMARY

Sri Lanka has a population of 19.5 million that is growing at around 1.2 percent per annum. The land area is 65,610 sq kms with a population density of 310 persons per sq km. During the last five decades its economy grew by an annual average rate of 4.2%, but this has been insufficient to elevate the country to a high growth path due to deep rooted deficiencies in growth promotion factors. In 2004, the nominal GDP of Sri Lanka was estimated to have reached about $20 billion and GDP per capita to about $1,031.

Trade and Tourism

The value of Sri Lanka’s exports grew strongly by 8.1 percent per year over the 18 year period 1985-2003. Within this period, imports also grew by 7.9% pa. Sri Lanka’s external trade between the other SAARC countries for the period 2000-2004 accounts for 1/3 rd of the total trade between all SAARC countries, with the Sri Lanka/India trade volumes accounting for around 30%. The potential to expand intra-regional trade rapidly from a low base by liberalizing bilateral trading arrangements is well illustrated by the experience of India and Sri Lanka following the implementation of a free trade agreement between them in 2001. In the following year (2002), the value of the bilateral trade between India and Sri Lanka registered a 48 percent increase. In 2004, Sri Lanka and India agreed to convert the Indo-Sri Lanka Free Trade Agreement (ISLFTA) into a Comprehensive Economic Partnership Agreement (CEPA) incorporating trade and service agreements. The Pakistan-Sri Lanka Free Trade Agreement (PSLFTA) was signed in February 2005.

The tourist arrivals from the SAARC countries represents around 20-25% of all tourist arrivals with Indian tourists accounting for over 80% of arrivals from SAARC countries. Foreign tourist arrivals increased by an average of 5 percent per year during the 13-year period 1990-2003. From 2003, however, this has increased at 29.6% p.a. mainly due to higher arrivals from India that rose from 33,924 in 2001 to 105,151, a rate of increase of nearly 50% p.a.

Regional Transport Services & Corridors

Sri Lanka being an island nation has only limited regional corridors within SAARC. It has only air and maritime links with other countries in the SAARC region.

Aviation

Sri Lanka has one international airport - Bandaranaike International Airport – that is located 32 kms north of the centre of Colombo. During the year 2004, 37 international airlines, including 8 cargo airlines, operated in Sri Lanka. There were 4.1 million passengers who

iv passed through the BIA with transit passengers making up around 15%. There were 145, 647 tones of freight tonnage handled by the BIA.

Air Traffic at BIA has steadily increased with an average annual growth rates of 7.9 % for international passengers since 1990. The demand for Sri Lankans travelling abroad has been 7.2% per annum, while tourist arrivals have been growing at a slower rate of 4.7% p.a. In particular the growth rate for 2003 and 2004 was remarkably high with both tourist and local travel showing high growth. There has also been a rapid growth in transit passengers at 26% per annum during the last six years.

Existing policies of the Government of Sri Lanka with respect to the aviation sector are:

(i) Foreign Charter and Freighter operators being allowed operations to Sri Lanka under an ‘open skies’ policy; and

(ii) Fifty Nine (59) bilateral air services agreements under the Government’s pursuit of a liberalized market access on a reciprocal basis. Of these four are with SAARC countries with Sri Lanka having direct flights between 3 other SAARC countries at present - India, Maldives and Pakistan. There are 106 direct flights per week to 10 Indian cities with 5 flights per week to Karachi in Pakistan and a further 27 flights per week to the Maldives.

Sri Lanka faces several deficiencies in attracting major airlines. Of them, insufficient supporting infrastructure and inadequate ancillary services, such as high cost bunkering services, poor road transportation and insufficient accommodation, constitute the major shortcomings. This has inhibited Sri Lanka from emerging as a main aviation hub, harnessing its strategic geographical advantage.

The aviation industry sees no major constraint with respect to the actual airport infrastructure as such but highlighted a number of other aspects as appreciable constraints. These were as follows:

• High ground handling charges preventing the overall growth of passenger traffic arriving at the BIA and therefore the progress of connectivity to other SAARC countries;

• Poor ground access between BIA and resorts for attracting transit passengers with stopover packages. This is seen an impediment for passengers especially from the Maldives, southern India and Bangladesh; • Lack of a Low Cost Carrier to introduce low-cost airlines in the SAARC region to tap in to this vast market. It is considered that such an initiative would result in a phenomenal increase in air travel within the SAARC region;

v • A fully-fledged Open Skies policy for passenger travel that would encourage the commercial viability to sustain the development of air services between points in SAARC countries which at present have lower traffic loads; and • Liberalization of Air Services needed for developing air routes connecting Sri Lanka to other SAARC destination to its true potential. On routes where this has been carried out, the fares have reduced, while frequencies and destinations have increased rapidly.

The forecasts made for traffic at BIA estimates growth rates of between 6 to 8 percent per annum for passenger traffic translating to 6.5 million passengers by 2010; 9 million passengers by 2015; 12 million passengers by 2020 and 18 million passengers by 2025. Freight movements are anticipated to grow between 9 to12 percent per annum to reach one million tons around the year 2025. However, recent growth spurts resulting from liberalization of aviation in the SAARC region and the continuing adoption of such policies, particularly with respect to those discussed above could result in much faster growth of regional traffic, easily doubling growth rates for the next 10 years.

Bandaranaike International Airport (BIA) is operational 24 hours per day and is managed by the State-Owned Airport and Aviation Services (Sri Lanka) Ltd. (AASL). With regard to airport infrastructure, there have been several phased development programmes within a Master Plan originally formulated in 1981. These developments have been funded by the Overseas Economic Cooperation Fund (OECF) of Japan. The Phase II is presently in progress, with the Stage 1 that consists of improvements to the passenger terminals, addition of cargo terminal space, rehabilitation of runways and the construction of a passenger pier and air bridges having been concluded in November 2005. Presently, a feasibility study is being conducted that is funded by the OECF for Stage 2 of the Phase II Master Plan. This study envisages the development of BIA with a second runway as well, as expansion of passenger terminals, as some of the present facilities will become inadequate by 2010.

While the study of a 2 nd runway is in progress, there have been discussions regarding the construction of a 2 nd international airport in Sri Lanka, there have been preliminary studies in Kuda Oya located in the southern part of Sri Lanka. However, new locations in and around Weerawila are also being investigated at present.

Land Transport

As Sri Lanka is an island and as there is no land bridge across the Palks Strait, there are no international intra-regional roads or railways at present. No agreement between Sri Lanka and India exists to study the possibility of such a land bridge, even though there have been sporadic attempts to commence such a project over the last three decades.

vi The Sri Lanka Railways has a relatively small and mainly broad gauge (1,676 mm) railway, with a route network length of about 1,640 track kms comprising several lines. If such a land bridge were to be constructed it would connect to the Trans Asian Railway (TAR) via the Indian Railway network which is also now been converted to broad gauge.

The inventory length of roads is at present 96,346 kms, returning a road density of 1.47 kms per square km of land area. However, the estimated road length is 108,000 kms, with over 25,000 kms in paved condition. The active motorized vehicle fleet of around 1.2 million vehicles has been growing by between 5 to 8 percent per annum over the last decade. Hence, the Government of Sri Lanka has decided to implement a policy to develop a network of new Expressways/Limited Access Roads to supplement the existing road capacity. As such, 400 km of such high mobility roads required to support the island’s growing economy have been identified for development as a high mobility network. These could be part of an Asian Highway system in the future if a land bridge were to be built between India and Sri Lanka.

Ferry Services

One of the railway lines is from Colombo, north bound to Talaimannar Pier on the north- western coast of Sri Lanka opposite Rameswaram, located across the Palk Strait in Tamil Nadu State of India. This line from Colombo to Talaimannar is 337 kms. Both lines have been designated links in the Trans-Asian Railway (TAR). However, the service was suspended on the northern section of this line from June 1990 due to the civil conflict in the north and northeast. Even though there was a bi-lateral agreement to connect the Sri Lanka railway at Talaimannar with the Indian Railways at Rameshwaran, by means of a ferry service, this was abandoned in the mid 1980s due to civil strife in the northern areas of Sri Lanka. In 1984, this service was carrying around 120, 000 passengers per annum even though it was open only for around 6 months of the year due to the monsoon period. The channel that was used is considered very shallow and navigation of modern day vessels is doubtful, even if the services were to be resumed. More recently two other proposals have been made for the re-connection of Sri Lanka and southern India by direct shipping services. These are proposals for ferry services between (a) Colombo and Tuticorin, and (b) Colombo and Cochin.

(a) Proposed Colombo to Tuticorin Ferry Service

The distance between Colombo and Tuticorin is approximately 140 nautical miles or 260 km. A shipping service operated between Colombo and Tuticorin before India and Sri Lanka received independence in 1947. This service was suspended in the wake of civil unrest in the immediate post-independence era. Two decades ago, both countries decided to revive this link and a passenger jetty was constructed at Tuticorin for this purpose, but the proposal was dropped following the outbreak of civil conflict in Sri Lanka. Both governments recently (2004) indicated their approval in principle to a re-launching of this service, but concerns by

vii the government of Tamil Nadu State about security matters have so far prevented its re- commencement. The service would primarily satisfy the requirements of tourists to visit the sacred city of Madurai, located 212 km north of Tuticorin in Tamil Nadu State. The ferry was to be equipped with a Roll-on-Roll-of (Ro-Ro) deck and would carry buses and trucks, in addition to private cars.

(b ) Proposed Colombo to Cochin Ferry Service

An alternative proposal was discussed between the national governments of India and Sri Lanka for the establishment of a ferry service between Colombo and the Port of Cochin in Karnataka State of India. The distance involved is 310 nautical miles, or 574 km.

Maritime Services

Sri Lanka has been located on a principal maritime route since the early discoverers set sail in their sailing craft and other seagoing vessels. Historically, therefore seafarers have been calling on the Port of Colombo for hundreds of years, given its natural advantage due to its geographical location. Traditional exports, such as tea, rubber and coconut, were the reason for calling in these early years.

In recent years, there is a great desire to develop Sri Lanka as a Mega Hub to be the Gateway to the Indian sub continent and ambitious plans are being formulated to the achievement of this strategy. Its location is ideal for the hub concept being in the southern tip of India and being able to provide good connectivity to both the Far East and the Middle East with respect to container services. Successive governments have expressed their desire to develop the Colombo Port in particular to be well ahead of other ports in the region in its capability to handle container traffic. Aggressive implementable development plans are necessary to meet advancements in containerized cargo handling and to resolve three major challenges: • To address the present capacity constraints; • The impact of the development of Mega-Carriers; and • To compete with the rapid development of other regional ports.

Feasibility studies, investigations and proposals have been considered from time-to-time over recent years. A Master Plan for development of all the Ports in Sri Lanka has been prepared with recommendations by a study team under technical assistance by the ADB. The Colombo South Harbour (CSH) development project is considered the key to success.

Colombo Port experienced a period of rapid growth during the 90’s, averaging 20% p.a. until 1998 when the growth came to a standstill. The overall volumes than remained almost static at around 1.7 million TEU per year for five years until 2003, despite the rapid growth in the ISC base market. Growth resumed again with 11% growth in 2003. Transhipment accounted for about 70% of Colombo’s total container traffic, of which more than three quarters of this

viii transhipment was traffic to and from the ISC region comprising of India, Pakistan and Bangladesh. When traffic distribution is analysed between 1998 and 2002, the transhipment share of total ISC cargo declined from 52% to 45% as direct calls to those countries increased. This was against a back drop of increased ISC transhipment market of 8% per annum, i.e. 1.5 million to 2.1 million TEUs, thus indicating a loss of market share by Colombo. However, since then there is an increased growth in TEUs handled.

There are predictions that the ISC economies will perform better in the future than the past, and as such the Colombo Port’s capacity should be increased to benefit from the increased import/export activities of India, Pakistan and Bangladesh.

The latest actual figures for the year 2005 gives a reason for optimism with the Port of Colombo handling 2,039,234 TEUs during the first 10 months of 2005, an increase of 10.4% when compared to last year’s corresponding volumes. Basing on a 70% transhipment container throughput, the Colombo transhipment volume had a growth rate of 10.3% and the increase in domestic volume was 10.7%.

The total number of vessels, by type of vessel, calling over at the Port of Colombo in the year 2004 was as follows: Container Carriers 3,057 Conventional Cargo 234 Dry Bulk Carriers 171 Oil Tankers 108 Roll on Roll off 89 Passenger Vessels 15 Other Vessels 539 Total 4.213

There are compelling reasons why the Port of Colombo should undergo drastic development and modernization. Rapid trade growth is predicted in the region with most countries tending to treat maritime activity only as a service to trade. However, there are countries such as the UK, Singapore and more recently Dubai in the UAE, who have developed maritime activities as a major business generating employment and revenue that contributes to the National Economy. Sri Lanka should formulate a strategy and position itself learning from these success stories.

The following are key reasons why the Colombo South Harbour Project should take off: • Significant increase in Sri Lanka’s external trade is forecast; • Regional economic growth is very rapid and is higher than the previously predicted levels; • Big demand for transhipment facilities; • Port development in the region, especially in India, promoting feeder connectivity; • Advancements in the design and construction of container vessels (5th generation)

ix • Technological advancements in port and container handling operations; • Greater use of IT Systems (e-Commerce, e-Business etc.) • Structural changes in shipping lines; and • Impact of high premiums in the international maritime insurance market.

Apart from the development plans for the Port of Colombo, there are tentative proposals for six other port development projects at other ports scattered around the country, including those at Trincomalee and Galle.

South Asia is a populous region and identified as potential for rapid economic growth .The cargo catchments area for Sri Lanka could be expanded to include other neighbouring parts of the world. The National Ports and Shipping Policy of Sri Lanka document states the following:

In the areas of multi-country consolidation, entreport trade, bulk shipping, salvage and towage, ship chandelling, ship management, maritime surveying, marine insurance and legal services, Sri Lanka has the potential to significantly increase its business volumes by getting a better share of the global market.

x 1 COUNTRY PROFILE

1.1 Geography

The island nation of Sri Lanka lies in the Indian Ocean just north of the equator and south of India. It is separated from Tamil Nadu State of India by the Palk Strait, which at its narrowest point is only 32 kms wide. The country occupies a strategic position near the main sea lanes between Europe and Asia, a factor which has allowed it to develop as a transhipment point for cargo originating or destined for the Indian sub-continent.

The maximum length of the island (from north to south) is 435 kms, while the maximum width (east to west) is 240 kms. Sri Lanka has a land area of 65,610 km 2 and a coastline measuring about 1,600 kms. Despite its small size, Sri Lanka has a great deal of geographic and climatic diversity with the island is divided into three zones of wet, dry and intermediate, taking into consideration agricultural land use, distribution of the forest species, rainfall, topography and soils. On its southern and eastern coasts, Sri Lanka has an abundance of scenic beaches that over the years have become a major tourist attraction. The capital, Colombo, with its highly developed seaport, is located on the west coast.

1.2 Population

Sri Lanka has a population of 19.5 million growing at around 1.2 percent per annum. The land area is 65,610 sq kms, with a population density of 310 persons per sq km. The labour force in 2004 was estimated at 8.0 million with a Labour Force Participation Rate of 47.8 percent and an unemployment rate of 8.5 percent. The employment is distributed among agriculture (34.1%), industry (21.4%) and services (44.5%). Government employment is 1.1 million. Life Expectation at Birth is 71.7 years for males and 76.4 for females. The overall literacy rate is 92.5% with males at 94.5% and females at 90.6%. The Human Development Index is 0.74 ranking Sri Lanka as 96 th among 177 countries. Poverty at an income less than US $1 per day is 6.6% of the population. The Gini coefficient of Household Incomes is 0.46.

1.3 Economy

The growth of the economy over the last 15 years is given in Table 1. During the last five decades-since Independence, Sri Lanka’s economy has grown by an annual average rate of 4.2%, but this has been insufficient to elevate the country to a high growth path due to deep rooted deficiencies in growth promotion factors. Despite the prolonged civil conflict in the country, the growth performance of the economy has been relatively good and is seen as evidence that the policy reforms associated with the restructuring and liberalization of the economy, which commenced in the 1990’s, are working. Nevertheless, the country has not lived up to its growth potential and economic performance still lags well behind East and Southeast Asia. The Government now seeks to attain greater stability and has adopted higher GDP growth targets. Achievement of these targets will depend crucially on the application of

1 more radical reforms, as well as sustained progress in the implementation of a peace settlement of the long running conflict in the country’s northeast. The development of the economic infrastructure needed for faster growth is to be accelerated through continued policy, market, institutional and infrastructure reforms. Amidst agitation from some sectors of the public, social infrastructure reforms that could create a sufficiently high level of human capital are also being implemented.

Table 1: Sri Lankan GDP (1990-2004)

GDP Rs Mn Growth at 1996 Factor Rates Year Cost Prices 1990 516,153 1991 539,955 4.6% 1992 563,062 4.3% 1993 602,172 6.9% 1994 636,061 5.6% 1995 670,742 5.5% 1996 695,934 3.8% 1997 739,763 6.3% 1998 774,796 4.7% 1999 808,340 4.3% 2000 857,035 6.0% 2001 843,794 -1.5% 2002 877,160 4.0% 2003 930,057 6.0% 2004 979,925 5.4%

Average Annual Growth Rate 4.7%

(Source: Annual Report, Central Bank of Sri Lanka, 2005)

In 2004, the nominal GDP of Sri Lanka was estimated to have reached about $20 billion and GDP per capita about $1,031. This places Sri Lanka at the higher end of the SAARC countries in terms of per capita income. Table 2 gives a further analysis of the GDP.

2 Table 2: The State of the Economy in 2004 GDP at current market prices in US$ 20.1 US$ bn Structure of GDP Agriculture 17.8% Industry 26.8% Services 55.4% External Trade Exports 5.751 US$ bn Imports 8.000 US$ bn Growth of External Trade Exports 17.9% p.a. Imports 26.0% p.a.

(Source: Annual Report, Central Bank, 2005)

1.4 Trade

The value of Sri Lanka’s exports to the rest of the world grew strongly (by 8.1 percent per year) over the 18 year period 1985-2003, as may be seen in Table 3. Within this period, the total value of exports declined in two successive years (2001 and 2002) but rebounded to grow by 9.5 percent in 2003. The three top commodities exported are garments, tea and precious stones, together comprising 62 percent of the total value of Sri Lanka’s exports to the rest of the world in 2003. The same three commodities also accounted for 62 percent of the total export value in 1990, showing that they grew in line with total export value.

During the period shown above, imports grew at a similar pace to exports, averaging growth of 7.9 percent per year, but in 2003 import growth was more than double that of exports, possibly a reflection of strengthening demand for manufacturing machinery and raw materials inputs, as part of the economic recovery in that year. The top three import commodities - basic manufactured products, machines and transport equipment and miscellaneous manufactures – accounted for more than two thirds of the total value of imports in 2003.

Sri Lanka’s external trade between the other SAARC countries for the period 2000-2004 is given in Table 4 Trade with Sri Lanka accounts for 1/3 rd of the total trade between all SAARC countries, with Sri Lanka/India trade volumes accounting for around 30%.

The volume of trade is given in different units of measurements such as: • numbers (or units) e.g. vehicles; • kilograms (kgs) e.g. rice; • meters (m) e.g. rope;

3 • pieces e.g. electrical items; • sq. meters e.g. carpet; • liters e.g. oil; • cubic meters; and • carats.

The overall distribution of trade between the SAARC countries by volume of trade and mode of transport for the year 2004 is given in Tables 5 and 6 for exports and imports respectively.

The potential to expand intra-regional trade rapidly from a low base by liberalizing bilateral trading arrangements is well illustrated by the experience of India and Sri Lanka following the implementation of a free trade agreement between them in 2001. In the following year (2002), the value of the bilateral trade between India and Sri Lanka registered a 48 percent increase, with Sri Lanka’s exports to India increasing from $71 million in 2001 to $168 million in 2002 and India’s exports to Sri Lanka increasing from $ 604 million in 2001 to $831 in 2002 (ADB Regional Cooperation Strategy and Program 2004-2007, South Asia, Second Draft August 2004 ). This trade agreement also stimulated new Foreign Direct Investment, particularly from India to Sri Lanka in a wide range of products, such as rubber- based products and information and communications technology. In 2004, Sri Lanka and India agreed to convert the Indo-Sri Lanka Free Trade Agreement (ISLFTA) into a Comprehensive Economic Partnership Agreement (CEPA) incorporating trade and service agreements. The Pakistan-Sri Lanka Free Trade Agreement (PSLFTA) was signed in February 2005.

4 Table 3: Trends in value of trade between Sri Lanka and the rest of the world 1985 1990 1995 1998 1999 2000 2001 2002 2003 2004

Exports 1 ($mn) 1,264.9 1,895.3 3,801.0 4,819.9 4,621.8 5,458.8 4,722.4 4,679.9 5,125.9 5,757 Imports 3 ($mn) 1,831.8 2,636.4 4,481.0 6,263.4 6,255.2 6,688.0 5,730.8 6,022.8 7,173.8 8,000 (Source: Annual Report, Central Bank of Sri Lanka ) Table 4: Sri Lanka’s External Trade with SAARC Countries (2000-2004) – Rs Million 2 Country Exports Imports 2000 2001 2002 2003 2004 2000 2001 2002 2003 2004

Bangladesh 775 901 974 1,078 1,408 270 183 374 544 779 Bhutan ------India 4,398 6,433 16,312 23,679 39,616 45,477 53,750 81,585 103,588 145,625 Nepal 61 30 85 160 29 7 1 18 - 8 Pakistan 2,251 2,222 2,759 3,545 3,992 5,469 6,597 6,303 6,851 10,920 Maldives 8,916 4,508 4,392 5,353 6,216 2,377 3,138 2,986 2,186 2,008 TOTAL 14,376 14,094 24,522 33,815 51,262 53,600 63,699 91,266 113,169 159,339 (Source: Annual Report, Central Bank of Sri Lanka)

1 FOB value for exports and CIF value for imports

2 In 2004, 1US$ was equivalent to approximately Rs 100

5 Table 5: Quantities Exported to SAARC Countries (2004)

Air Freight Sea Freight Bangla desh India Nepal Paki stan Mal dives Bangla desh India Nepal Paki stan Mal dives Units 16,313 426,162 1,166 6,320 105,601 28,877 16,569,623 2,330 37,895 469,011 Kgs 139,951 3,417,532 3,003 2,971,353 7,986,159 6,523,415 391,431,768 193,566 54,588,873 20,269,836 Metres 23,775 Pieces 15 613 2,923 120,952 36,520 Sq M 1 18,267 356 28,752 445,045 72,970 Litres 878 52,403 4,015,313 Cubic M 404 42,753 Carrots 189 99,415 45,283 (Source: Customs Department)

Table 6: Quantities Imported from SAARC Countries (2004)

Air Freight Sea Freight Bangladesh India Nepal Pakistan Maldives Bangladesh India Nepal Pakistan Maldives Units 1 1,955,506 38,237 683,349 7,772 86,841,041 35 209,996 116,872 Kgs 52,486 4,548,760 195 393,064 1,387,126 7,857,285 3,238,257,410 18,013 145,361,262 18,581,249 Metres 90,114 13,924 Pieces 7 627 49 68 46,147 779 Sq M 4,747 3 5,261,472 17,043 Litres 4,710 975,833 960 990 Cubic M 66,561 Carrots 660,631 15,299 (Source: Customs Department)

6 1.5 Tourism

Foreign tourist arrivals in Sri Lanka increased by an average of 5 percent per year during the 13-year period 1990-2003 (see Table 7), despite the dampening effects of the post 9/11 worldwide recession in tourism and travel and of the on-going security problems associated with the civil conflict. In 2003, however, the tourism industry in Sri Lanka was resurgent, with visitor arrivals increasing dramatically (27 percent) to reach 500,000 in that year.

Table 7: Foreign tourist arrivals in Sri Lanka, 1990 – 2003

Average annual rate of 1990 1995 1999 2000 2001 2002 2003 2004 growth % 1990-2004 2003-2004

266,245 403,401 436,440 400,414 336,794 393,171 500,642 566,202 5.0% 11.3%

(Source: Sri Lanka Statistical Data Sheet Year 2003 ( www.statistics.gov.lk )

Tourist arrivals from SAARC countries account for around 20-25% of all tourist arrivals with Indian tourists making up over 80% of arrivals from SAARC countries. The details for the past five years are shown in Table 8:

Table 8: Tourist Arrivals from SAARC countries (2000-2004)

Origin No of Passengers per year 2000 2001 2002 2003 2004 Bangladesh 1,218 1,745 1,521 1,830 1,953 India 31,860 33,924 69,960 90,603 105,151 Maldives 7,935 9,019 9,861 11,583 15,463 Nepal 534 508 789 980 1,004 Pakistan 10,005 8,562 6,756 9,704 9,638 Bhutan n/a n/a n/a n/a n/a

(Source: Airport Aviation Authority of Sri Lanka)

Section 1.5.1- Outbound Tourism

Travel within the SAARC region is also important for strengthening religious and cultural ties between these countries. For example, even though Lumbini the birthplace of Lord Buddha is in Nepal, the Nepal Report asserts that it has not ‘been able to use this potentially due to a number of reasons, among others the lack of smooth connectivity’. Thus it is clear that there is a latent demand for such travel, which would increase if direct flights are introduced.

7

On the other hand, if we were to take the case of outbound travel to Buddhagaya, the foremost place of religious interest to Sri Lankans in India, only less than 1% of the total travel to India was made on the flights to Gaya even in spite of Sri Lankan Airlines operating direct flights.

It is clear from the above, that outbound tourism is in most cases a function of economic growth. The present outbound tourism to India and Nepal is therefore included in the total number of passengers in further analysis and not treated separately.

In the case of people of Indian Origin, while linguistic and cultural connectivity is a strong generator of travel, the exact quantum of such is not known. One could assume that the large portion of travel up to 1984 by the Ferry related to such travel, this form of low cast travel is not available today. It is therefore possible that only a fraction of the potential demand has been realized. This is further strengthen by the fact that nearly one half of all departures to India by air are to Chennai.

1.6 Transport

1.6.1 Early Development of Transport

Sri Lanka’s earliest known transport dates back to the 1 st century BC when a road network connected the then capital of Anuradhapura to the coastal ports in the northeast, north and east of the country. These roads were dominant in the dry zone of the country, especially around the areas of rice production and connected places of worship and the seats of the different kingdoms up to the 10 th century BC. Roads opened up and closed with the rise and fall of various kingdoms.

The roads in the coastal belt were added after the 11 th century with the migration of people to these areas. Roads to the up-country areas were only built after the arrival of the Europeans in the coastal area.

1.6.2 Inland Waterways

The arrival of the Dutch in the 18 th century saw the development of a canal network or waterways in the Western Province that extended from Kalutara to Puttalam along the coast

8 with a total length of over 175 kms. These were effective in navigating the large rivers, as well as the marshy areas in the Wet Zone, and were used by barges to access the coconut and spice plantation areas and connect them to the port in Colombo for export. It was the waterways that provided the catalyst to begin the growth of Colombo and its suburbs as the country’s economic and social centre, which has continued until today even though the waterway itself now lies unused being for the most part covered with salvinia and with many sections being non-navigable.

1.6.3 Land Transport

The growth of import-export activities following the opening of the Suez Canal led to the Port of Colombo becoming a focal point for inland transport. With Colombo being increasingly used by successive colonial ruling powers as the administrative capital, it evolved as the most important hub for an inland transport network.

The construction of most sections of the present-day road network dates to the period of the British. Initially, the roads were constructed mostly for political and military consideration. However, with the promotion of coffee cultivation after 1830, road building was then considered a priority for reasons of economy and trade. The shift to tea production from 1880 further expanded the road network. Presently, the road network has an estimated 108,000 kms of road length with around 25,000 kms being paved roads.

The desire for more reliability and speed in transporting plantation produce led to the completion of the railway line to Kandy from Colombo in 1867. The period up to 1894 then saw the extension of several lines up to 1,520 kms covering all the provincial capitals and the railway established itself as the primary means of passenger and goods travel. Presently, the railway has a track length of 1,449 kms connecting 168 stations and 144 sub-stations. It has 131 locomotives and power sets in active service with around 550 passenger carriages and 958 freight wagons in operating condition.

1.6.4 Current Land Transport Activity

Transport activity since independence has been increasing at 5 to 6 percent per annum, with a per capita increase of around 4 percent per annum. The road transport now accounts for 95 percent of passenger travel and 97 percent of freight transport. Buses carry 68 percent of the passengers, while para-transit in the form of three wheeler taxis makes up another 2 percent. Transport activity is most dominant within the Colombo City and its environs with an estimated 120,000 vehicles entering the city daily carrying over 1 million passengers. Of this, 68% arrive by bus, whereas the railway carries another 5% with only 26% using all the other modes of private transport (Table 9). Table 9: Transport Modal Shares: Sri Lanka (2001)

Mode Vehicle Kms Passenger Kms Ton Kms Carried

9 Operated (mn) Carried (mn) (mn) Bus 966 (08%) 45,407 (68%) Private Vehicles 7,861 (64%) 15,831 (24%) Railways 11 (00%) 3,600 (5%) 102 (02%) Three Wheelers 1,548 (13%) 1,161 (2%) Lorry/Land Veh. 1,813 (15%) 907 (1%) 4,532 (97%) Water Transport 3 (00%) 32 (01%) Total 12,202 (100%) 66,906 (100%) 4,666 (100%)

(Source: Kumarage, A.S., in Sri Lanka National Atlas, Survey Department, 2001)

1.6.5 Ports

There are seven Ports in Sri Lanka identified for development under the Port Development Policy. They are all under the Sri Lankan Ports Authority (SLPA), which is a State Enterprise directed by the Ministry of Ports and Civil Aviation. The seven Ports are as follows: • Colombo - the Capital of Sri Lanka in the west; • Galle - in the south; • Hambantota - also in the south that is indicated for major expansion plans under the Southern Development Plan; • Oluvil – in the east; • Trincomalee – in the east, a natural deep water harbour; • Point Pedro – in the north; and • Kankesanthurai – also in the north.

Even though Sri Lanka has the world’s largest natural harbour in Trincomalee, it has been Colombo that has developed due to its strategic location being on the route between the Far East and Europe. Even though both Trincomalee and Galle are international ports, only Colombo is equipped to handle containerized cargo. Over 95% of the cargo now moves through Colombo. Approximately 20% of Sri Lanka’s export and import cargo moves in bulk and break-bulk form and this is handled at 12 conventional berths, having a capacity to handle vessels up to 23,000 DWT. A summary of the throughput of the ports is given in Table 10. Table 10: Port Services (2003-4) Item 2003 2004 3 Vessels arrived (No.) 4,032 3,883 • Colombo 3,838 3,688 • Galle 73 88 • Trincomalee 121 107

3 Provisional Estimates

10 Total cargo handled (MT ) 30,500 ,000 33,962 ,000 • Colombo 28,198 ,000 31,299 ,000 • Galle 482,000 581,000 • Trincomalee 1,820,000 2,082,000 Total container traffic (TEU) 1,959,000 2,221,000 Transhipment container (TEU) 1,371 ,000 1,531 ,000

(Source: Annual Reports, Sri Lanka Ports Authority)

1.6.6 Airports

The older airports used during World War II and Ratmalana airport were initially used for international flights, but are now used only for domestic travel. Due to the security situation prevailing in recent times, these were also restricted only for military use in many instances. The only international airport was built in 1961 named the Bandaranaike International Airport (BIA) and is located at Katunayake, a distance of 32 kms north of Colombo. It has a runway 3,368 metres in length and presently handles over 26,000 flights annually. The annual passenger throughput is around 4.1 million, while the cargo tonnage handled was over 145,000 metric tonnes. There are presently over 30 different air carriers using the airport, including 8 cargo carriers calling at Colombo, that are providing flights to 44 destinations making up over 35,000 annual aircraft movements from the BIA.

1.6.7 Transport Map

A map showing the location of major transport infrastructure within Sri Lanka is shown in Figure 1.

11 Figure 1: Transport Map of Sri Lanka

12 2 PROFILE OF CORRIDORS/SECTORS

Sri Lanka being an island nation has only limited regional corridors within SAARC. As shown in the table below, it has only air and maritime links with other countries in the SAARC region. Table 11: Regional Transport Corridors

Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka Aviation Y Y Y Y Y Y Y Maritime Y N Y Y N Y Y* Rail Y N Y N Y Y N Road Y Y Y N Y Y N Inland Y N Y N N N N Waterways Borders Y Y Y N Y Y N Dryports/ICD Y Y Y N Y Y N Y= Where regional links exist N= Where regional links do not exist * Includes the Rail-Ferry service that does not operate at present

2.1 Aviation Sector

Both domestic and international air travel increased during the last three years. Vital reforms are being made in the civil aviation sector leading to a greater degree of deregulation and bilateral liberalization agreements to attract more international carriers and tourists to the country.

Three domestic airlines operated during 2004, with the first civil helicopter service recommencing commercial operations in July 2004, after a lapse of eight and a half years. Sri Lankan Airlines introduced three water aerodromes or air taxis aiming at increasing domestic air transportation.

During 2004, 37 international airlines, including 8 cargo airlines, operated in Sri Lanka. The number of passengers who passed through the BIA, and freight tonnage handled increased by 25 per cent and 18 per cent, respectively, in 2004.

The Civil Aviation Authority of Sri Lanka (CAASL) provides more flexibility to regulate civil air operations within Sri Lanka, while being responsible for formulating aviation policies, preparing aviation development plans and strategies, enforcing aviation safety requirements and coordinating with international civil aviation organizations. The Ministry of Ports and Civil Aviation has initiated the formulation of an aviation policy for Sri Lanka covering the overall development and the management of the aviation sector. To further enhance the liberalization the Air Navigation Act No. 13 of 1950 will be replaced by the proposed Civil Aviation Act that would provide greater flexibility in civil aviation.

13 Sri Lanka faces several deficiencies in the attracting major airlines. Of them, insufficient related infrastructure and inadequate ancillary services, such as high cost bunkering services, poor road transportation and insufficient accommodation constitute the major shortcomings. This has inhibited Sri Lanka from emerging as a main hub, harnessing its strategic geographical advantage.

Existing policies of the Government of Sri Lanka with respect to the aviation sector are:

(i) Foreign charter and freighter operators being allowed operations to Sri Lanka under an ‘open skies’ policy; and

(ii) Fifty Nine (59) bilateral air services agreements under the Government’s pursuit of a liberalized market access on a reciprocal basis, four of which are with SAARC countries.

2.1.1 Aviation Gateways in SAARC Region

In order to study regional travel patterns by air transport, the following 20 international airports in the SAARC region were included in the study at the 2nd Technical Committee Meeting held in October 2005 in Kathmandu: 1. Bangalore 8. Delhi 14. Lahore 2. Calicut 9. Gaya 15. Male/Gan 3. Chennai (Buddagaya) 16. Mumbai 4. Chittagong 10. Hyderabad 17. Paro 5. Cochin 11. Kathmandu 18. Tiruchchirapali 6. Colombo 12. Karachi 19. Trivandrum 7. Dhaka 13. Kolkota 20. Varansi

Sri Lanka has direct flights between 3 other SAARC countries at present. These are India, Maldives and Pakistan with 106 direct flights per week to 10 Indian cities with 5 flights per week to Karachi in Pakistan (with 2 more negotiated last year) and a further 27 flights per week to the Maldives. Chennai in India has the highest number of flights to a single destination amounting to 36 flights per week. Figure 2 shows a route map of air services within the SAARC region. Sri Lanka has bilateral agreements with each of these three SAARC countries to which there are flights from Colombo. It also has an agreement with Bangladesh to which there are no flights at the present time. The details of the agreements are as follows:

14 Figure 2: SAARC Air Routes from Sri Lanka

2.1.2 Air Services Agreement between Sri Lanka and India

The agreement provides for operating the designated airline of Sri Lanka, which is Sri Lankan Airlines (UL), that may operates as follows: • Points of Departure: Points in Sri Lanka (see below); • Intermediate Points: None; • Points in India: Operating at present (i) Tirichchirapalli (unlimited frequencies); (ii) Madras (7 frequencies per week); (iii) Trivandrum (unlimited frequencies); (iv) Mumbai and beyond as maybe agreed (7 frequencies per week); (v) Delhi (7 frequencies per week); (vi) Calicut (7 frequencies per week); (vii) Bangalore (7 frequencies per week); (viii) Gaya (unlimited frequencies); (ix) Cochin (unlimited frequencies); and (x) Hyderabad (unlimited frequencies).

Not operating at present (all unlimited frequencies) (i) Varanasi; (ii) Kolkota; (iii) Patna; (iv) Lucknow; (v) Guwahati; (vi) Bhubaneshwar; (vii) Khajuraho; (viii) Aurangabad; (ix) Goa; (x) Jaipur; (xi) Port Blair; (xii) Amristrar; (xiii) Vishakapatnam; and (xiv) Ahemadabad.

• Points Beyond:

Points beyond Mumbai have been agreed as Karachi and Sharjah.

The designated airlines of India, which are Indian Airlines, Air India, Jet Airways and Air Sahara, may operate as follows:

16 • Points of Departure: Points in India (see above); • Intermediate Points: None; • Points in Sri Lanka: (i) Colombo or Kankesanthurai; and (ii) Colombo and if desired beyond. • Frequency: The designated airlines of India are allowed the same number of flights from points in India to Sri Lanka as operated by the designated airlines of Sri Lanka; and • Traffic Rights: The designated airlines of both Sri Lanka and India may exercise 5 th freedom traffic rights for their operation to other SAARC countries.

2.1.3 Air Services Agreement between Sri Lanka and Maldives

The agreement provides for operating the designated airline of Sri Lanka (UL) may operate as follows: • Points of Departure: Colombo; • Intermediate Points: Not Specified; • Points in Maldives: Male; and • Points Beyond: Four Points beyond are to be determined by subsequent agreement.

The designated airline of Maldives is Air Maldives, which may operate as follows:

• Points of Departure: Male;

• Intermediate Points: None;

• Points in Sri Lanka: Colombo;

• Frequency: The designated airline of Maldives is allowed the same number of flights from points in Maldives to Sri Lanka as operated by the designated airlines of Sri Lanka; and

• Traffic Rights: The designated airlines of Sri Lanka may exercise 5 th freedom traffic rights for their operations to Tokyo, Zurich, London, Dubai, one point in Italy, one point in France and Cochin. The 5 th freedom traffic rights by the designated airline of the Maldives to be agreed upon in future. The designated airlines of both countries may exercise 5 th freedom traffic rights between respective capitals and SAARC capitals.

2.1.4 Air Services Agreement between Sri Lanka and Pakistan

The agreement provides for operating the designated airline of Sri Lanka as follows:

17 • Points of Departure: Colombo; • Intermediate Points: Without 5th freedom traffic rights in respect of Americas, U.K, Saudi Arabia, Bahrain, Oman, Kuwait and Qatar; • Points in Pakistan: Karachi and Lahore; and • Points Beyond: see above.

The designated airlines of Pakistan may operate as follows: • Points of Departure: Points in Pakistan; • Intermediate Points: No 5 th freedom traffic rights in respect of Americas, Australia, Japan, Hong Kong, Thailand, South Korea and Philippines; • Points in Sri Lanka: Colombo; and • Points Beyond: see above.

2.1.5 Air Services Agreement between Sri Lanka and Bangladesh

The agreement provides for operating the designated airline of Sri Lanka (UL), which may operates as follows: • Points of Departure: Points in Sri Lanka; • Intermediate Points: Any number of points; • Points in Bangladesh: Dhaka; and • Points Beyond: Any number of points.

The designated airline of Bangladesh is GMG Airlines, which may operate as follows:

• Points of Departure: Points in Bangladesh;

• Intermediate Points: Any number of points;

• Points in Sri Lanka: Colombo;

• Points beyond: Any number of points;

• Frequency: Agreed that both contracting parties may operate 3 frequencies per week, but the 3 rd frequency shall be only after concluding a commercial agreement. However, no flights operate at present; and

• Traffic Rights: From Intermediate points and Points Beyond to be agreed by both contracting parties. The designated airline of Bangladesh is permitted to use Male as an intermediate or beyond points with full 5 th freedom traffic rights. The designated airline of Sri Lanka is permitted to use Kathmandu as an intermediate or beyond point with full 5 th freedom traffic rights.

18 Table 12 gives the details of the flights that are operating at present: Table 12: Sri Lanka’s Air Service with SAARC Countries

SAARC Airport Airport Carrier Flights Country Code (Airline Code) per Week Delhi DEL UL 7 + 7 Mumbai BOM UL 4 + 4 Tiruchchirapalli TRZ UL 10 +10 India Trivandrum TRV UL 12 +12 Cochin COC UL 11 +11 Bangalore BLR UL 7 + 7 Calicut CCJ UL 9 + 9 Chennai MAA UL 15 +15 Chennai MAA IC 7 + 7 Chennai MAA JAI 7 + 7 Chennai MAA SAH 7 + 7 Hyderabad HYD UL 7 + 7 India/Pakistan Karachi / Mumbai KHI/BOM UL 3 + 3 Pakistan Karachi KHI PIA 2 + 2 Male MLE UL 15 +15 Male MLE Euro Fly 1 Male MLE EK 1 Dubai / Male DXB/MLE EK 6 Maldives Narita / Male MLE UL 2 London / Male MLE UL 2 KL / Male MLE MAS 1 Male / Dubai MLE/DXB EK 5 Male / Vienna MLE/VIE Al 1 Male / Düsseldorf MLE/DUS LTU 1 Male / Munich MLE/MUC LTU 1 Male / Frankfurt MLE/FRA LTU 1 Male / Doha MLE/DOH QTR 1

(Source: Airport & Aviation Authority of Sri Lanka)

2.2 Maritime Sector

In 2004, over 900 carriers called over in Sri Lanka from diverse countries as far afield as: Canada, UK, countries in Europe, Hong Kong, Singapore, Malaysia, Jamaica, Japan, Korea,

19 China , India, Bangladesh, Pakistan and the Middle East. Some of the major carriers, such as Maersk, Xpress, Pegasus, Orient, APL, Kota, and ZIM etc were frequent callers at Colombo.

2.2.1 Port of Colombo

The Port of Colombo has a water area of 184.6 hectares, with 3 breakwaters of 1,570 m, 810 m and 330 m respectively. It can presently handle Post Panamax-4th generation ships. The Colombo Port handles 95% of vessels calling to Sri Lanka and most vessels berth for cargo handling, though there are also facilities for the berthing of passenger vessels and Navy vessels, as well as oil and gas bunkering services and dry dock facilities for vessel repair.

There are three container terminals in the Colombo Port as follows:

i) Jaya Container Terminal (JCT) operated by SLPA;

ii) South Asia Gateway Terminal ( SAGT) by P&O Ports; and

iii) Unity Container Terminal (UCT) by SLPA.

There are two quays - the Bandaranaike Quay with a passenger terminal and the Prince Vijaya Quay. The entire perimeter harbour is well secured with the land areas between the water front and the Port boundary being well developed. There is a wide Perimeter Road and a number of access gates.

Colombo Port’s Indian Sub Continent (ISC) cargo handling is mainly for three countries within the SARCC - India, Pakistan and Bangladesh. The ISC traffic distribution averaged around 85% India; 7% Pakistan and 8% Bangladesh.

The port experienced rapid growth during the 90’s averaging 20% pa until 1998 when the growth came to a standstill. The overall volumes remained almost static at around 1.7 million TEU per year for the next five years until 2003, despite rapid growth in the ISC base market. Growth resumed at 11% in 2003.

Transhipments account for about 70% of Colombo’s total container traffic, of which more than three quarters is traffic to and from the ISC region comprised of India, Pakistan and Bangaladesh. When traffic distribution is analysed between 1998 and 2002, the transhipment share of total ISC cargo declined from 52% to 45% as direct calls to those countries increased. This decline was against a back drop of increased ISC transhipment market of 8% per annum, i.e. 1.5 million to 2.1 million TEUs. However, this trend has been reversed with an increased growth in the TEUs handled in recent years.

The Economic Intelligence Unit (EIU) forecasts that ISC economies will perform better in the future than the past. Therefore given the transhipment, there is a need to increase the

20 Colombo Port’s capacity to be able to benefit from the increased import/export activities of India, Pakistan and Bangladesh.

In light of the EIU’s projections using the latest available data, the actual figures for the year 2005 are that the port handled 2,039,234 TEUs during the first 10 months of 2005, an increase of 10.4% when compared to last year’s corresponding volumes. Based on a 70% transhipment container throughput, the transhipment volume has grown by 10.3% and the domestic volume was 10.7%. SLPA accounts for 61% of the total container handling in the port, and in September 2005 the highest ever monthly container volume of 138,385 TEUs was recorded.

The cargo types handled in Colombo Port are classified as Containerized, Break Bulk, Dry Bulk or Liquid Bulk. The total cargo tonnage handled during the first 10 months in 2005 increased to 28,762 thousand tonnes, from the previous year of 26,080 thousand tons, a rise of 10.3%. Dry bulk tonnage recorded a growth of 28.7%, mainly due to the increase in imports of bulk fertilizer, cement, gypsum and clinker. The break bulk tonnage of imports in fertilizer and cement reported an increase of 23.8% and 21.6% respectively, but sugar imports decreased by 78.9%. Total liquid cargo tonnage declined by 1.5% during the same period, though palm oil imports for the first ten months of 2005 doubled to 259,140 tonnes from the previous year’s figure of 85,565 tons - a significant increase of 202.9%.

At the 2 nd Technical Committee Meeting held in October, it was decided to include only the following 15 sea ports in the study.

1. Chennai 9. Male - including Kulhudhuffushi & Hithadhoo 2. Chittagong 10. Mongla 3. Cochin 11. Mumbai 4. Colombo 12. Port Qasim 5. Haldia 13. Tuticorin 6. Kandla 14. Trincomallee 7. Karachi 15. Vishakhapatanam 8. Kolkota .

21 Figure 3: SAARC Maritime Routes from Sri Lanka

22 And furthermore, only the following maritime corridors were considered significant to be studied at the present time:

From To Male Karachi Chittagong Karachi Chittagong Haldia/Kolkota

Chittagong Colombo Mumbai Karachi Mumbai Colombo Mumbai Male Mumbai Port Qasim

Male Colombo Chennai Colombo Chennai Male Colombo Haldia/Kolkota Male Haldia/Kolkota

Male Tuticorin

2.3 Road Corridors

As Sri Lanka is an island, there are no international roads in Sri Lanka at present. Since there is no land bridge across the Palks Strait, the road network in Sri Lanka is used only for its internal travel requirements. There is no agreement between Sri Lanka and India to study the possibility of a land bridge, to connect to the Asian Highway Netwrok or the Asian Railway Network, even though there have been sporadic attempts to commence such a project, over the last three decades.

The road sector in Sri Lanka comes under Ministry of Highways. The construction, rehabilitation and maintenance of the National Roads are carried out by the Road Development Authority (RDA) under the Central Government, while the Provincial Roads are administered by the Provincial Councils and Local Governments administer most of the other roads. There are also a significant length of roads administered by other agencies, such as plantations, irrigation and forest departments.

The inventory length of roads is at present 96,346 km with a road density of 1.47 kms per square km of land area. The estimated road length is however 108,000 kms, with over 25,000 being in paved condition.

23

Table 13: Road Length and Road Density (2001)

Road Length (km) Land Road Density (km/sq. km) Area sq.

km Other Other Other Roads Roads Roads Roads Roads Roads TOTAL National National National TOTAL Provincial Provincial Provincial

11,760 15,743 68,843 96,346 65,610 0.18 0.24 1.05 1.47

(Source: Transport Database, Transportation Engineering Division, University of Moratuwa)

There were a little under one million motorised vehicles using the road network in 2001. This is estimated to have increased to 1.2 million by end of 2004. The distribution of vehicles given in Table 14 shows that 48% of the fleet is made up of motor cycles and another 9% with low horse powered 3-wheelers, used mainly for hired transport. The bicycle is by far the commonest vehicle with an estimate of 41.5 vehicles per 100 households, whereas the motor cycle follow at 12 and other motorized vehicles at only 3.4 vehicles per 100 households respectively in 2001. Table 14: Estimated Operational Vehicle Fleet (2001) Motor Three Cars Lorries Buses Land Other TOTAL Cycles Wheelers & Vehicles Vans

464,910 294,019 105,276 31,874 57,213 1,946 955,238

(Source: Transport Database, Transportation Engineering Division, University of Moratuwa)

The active motorized vehicle fleet has been growing by between 5 to 8 percent per annum over the last decade. Hence the Government of Sri Lanka has decided to implement a policy to develop a network of new Expressways/Limited Access Roads to supplement the existing road capacity. As such, the RDA has identified more than 400 km of such high mobility roads required to support the island’s growing economy. These could be part of an Asian Highway system in the future is a land bridge was to be built between India and Sri Lanka.

Currently there are four major highway development projects either underway, or in the final stages of planning, (refer Figure 1):

• The Southern Highway, which is being constructed in two stages – the first of 61 kms being financed by the ADB and the second of 71 kms being financed by the Japan Bank for International Cooperation;

24 • The proposed tolled road from Colombo to Kandy of 98 kms, for which a Feasibility Study is presently under way;

• The 4-lane tolled Colombo-Katunayake Expressway of 25 kms (linking Colombo with the BIA at Katunayake), which is ready for funding under a BOT/BOO or similar arrangement; and

• The proposed Outer Circular Highway of 28 kms connecting the Southern Highway, the proposed Colombo to Kandy Highway and the Colombo-Katunayake Expressway, for which basic designs have been completed and environmental clearance obtained.

2.4 Rail Corridors

The Sri Lanka Railway has a relatively small and mainly broad gauge (1,676 mm) railway with a route network length of about 1,449 track kms. It comprises several lines, one of which is from Colombo northbound to Talaimannar Pier on the north-western coast of Sri Lanka opposite Rameswaram, located across the Palk Strait in Tamil Nadu State of India. This line from Colombo to Talaimannar is 337 kms. The lines on both sides have been designated links in the Trans-Asian Railway (TAR). However, the service has been suspended on the northern section of this line (from Medwachchiya to Talaimannar) since June 1990 due to the civil conflict in the north and northeast. The remainder of the network comprises lines from Colombo to Matara in the south, Colombo to Puttalam along the western coast, Polgahawela to Kandy and on to Matale in Central Sri Lanka, Maho to Trincomalee and Batticalo on the eastern coast, and Medawachchiya to Kankesanturai on the northern coast (refer Figure 1).

At present, the Sri Lanka Railways (SLR) contributes around 7 per cent and 2 per cent respectively, of the public passenger transportation and goods transpiration within the country. It does not have connectivity to the Indian sub-continent and is therefore not a part of the regional rail network. Even though there was a bi-lateral agreement to connect the Sri Lanka railway at Talaimannar with the Indian Railways at Rameshwaran, by a ferry service, this was abandoned in the mid 1980s due to civil strife in the northern areas of Sri Lanka. The nature of this operation is described under Section 2.5.

The state-owned SLR’s monopoly of railway transportation in Sri Lanka suffers from several major weaknesses, emanating mostly from rigidities in pricing, management and labour, leading to poor and declining quality of services on the one hand and heavy operational and financial net losses on the other. The operational losses have hindered the development of railway track, and prevented the strengthening and maintaining of the rolling stock and other operational systems.

25 Although the Sri Lanka Railways has 1,449 track kilometres, it operates only on 1,200 track kilometres, as services in the north have been suspended due to extensive damages. About a half of the available track is below the minimum standard and is subject to very low maximum speed limit and high accident risks. In 2004, the railway operated 8.4 million train kms, carrying a total of 4,684 million passenger kms and 134 million tonne kms of freight.

There are presently plans for several new rail lines and links including a dedicated service between Colombo and the Bandaranaike International Airport (BIA) at Katunayake on which an express luxury train is being planned for.

2.5 Inland Waterway Corridors

2.5.1 Talaimannar- Rameshwaran

Sri Lanka does not have connectivity by Inland Waterways to any other SAARC country. However, it had a ferry service between India and Sri Lanka from 1914 to the mid 1980s. This was actually the result of a bi-lateral arrangement between the two countries and administered by the respective railways. It was initially mostly used for the benefit of the migrant workers from India working in the tea plantations and for their repatriation to India under the Srima – Shastri pact as shown in Table 15 indicating the passenger movements from 1978 onwards. However by 1984 there was a more even movement in both directions. Table 15: Passenger Traffic on Indo-Sri Lanka Ferry Service (up to 1984) Passengers per annum Origin Destination 1978 1980 1982 1984 1985 onwards Sri Lanka India 57,000 79,405 66,580 56,458 Not Talaimannar Rameshwaran operated India Sri Lanka 3,480 17,340 28,885 63,539 Not Rameshwaran Talaimannar operated

(Source: Sri Lanka Railways)

Note: The imbalance in the traffic is due to the Srima-Shastri pact that allowed for repatriation of migrant workers back to India.

The service no longer operates due to the adverse security situation in the northern areas of Sri Lanka. The conflict in the north and north-east has been responsible for disrupting the operation of ferry services across the Palks Strait from Talaimannar Pier to Rameswaram. However, even when it was operative, the service was open only for around 6 months of the year to avoid bad weather in the monsoon periods. The channel that was used is considered very shallow and navigation of modern day vessels is doubtful, even if the services were to be resumed. Table 16 provides a summary of the present position regarding ferry transport between India and Sri Lanka.

26

Table 16: Potential for Ferry Services Question Report 1. What was the reason that The onset of the civil disturbances in the northern areas of the service was Sri Lanka meant that the services were intermittently suspended? disrupted since 1983 and finally fully suspended in 1985. 2. What was the capacity of 900 Passengers per trip one way x 3 times per week for 6 the ferries and their months per year. frequency? 3. How does the traffic that By air. But by comparison of fares, it is most likely that travelled on the ferry most of the traffic that used the ferry does not travel at all, now travel? or travels by air at much less frequency. Passengers/freight? 4. Have the vessels been Not known. However, it is unlikely they could be used sold or are they laid up? now. 5. What are the chances of Yes, there is a great demand to restore a similar service. A the service being proposal has been made by a private company Ms. East reinstated and why? West Ferry Pvt. Ltd, to restore this service. Other proposals for alternative routes e.g. from Danushkody have been received from India as well. 6. What investment would For a modern ferry it is estimated that the: be required to reopen the • Capital investment would be US - $10 mn link? • Annual operating cost would be US $ 1.1 mn 7. Proposed Fares Around US$ 50 per round trip: and Freight charges US $ 6 per Metric Ton

More recently two other proposals have been made for the re-connection of Sri Lanka and southern India by direct shipping services. These are proposals for ferry services between Colombo and Tuticorin, and between Colombo and Cochin (Figure 4).

27

To Cochin

Figure 4: Proposed Ferry Services

(a) Colombo to Tuticorin Ferry Service

The distance between Colombo and Tuticorin is approximately 140 nautical miles or 260 kms. A shipping service operated between Colombo and Tuticorin before India received independence in 1947 but this was suspended in the wake of civil unrest in the immediate post-independence era. Two decades ago, both countries decided to revive this link and a passenger jetty was constructed at Tuticorin for this purpose, but the proposal was dropped following the outbreak of civil conflict in Sri Lanka. Both governments recently (2004) indicated their approval in principle to a re-launching of this service, but concerns by the government of Tamil Nadu State about security matters have so far prevented its re- commencement. The service would primarily satisfy the requirements of tourists to visit the sacred city of Madurai, located 212 kms north of Tuticorin in Tamil Nadu State. The ferry was to be equipped with a Roll-on-Roll-of (Ro-Ro) deck and would carry buses and trucks, in addition to private cars.

(b) Colombo to Cochin Ferry Service

An alternative proposal was discussed between the national governments of India and Sri Lanka for the establishment of a ferry service between Colombo and the Port of Cochin in Karnataka State of India. The distance involved is 310 nautical miles, or 574 kms.

28 3 PROFILE OF GATEWAYS

3.1 Airports – Description of Airport Sector and Policies

3.1.1 Bandaranaike International Airport (Colombo)

Bandaranaike International Airport (BIA) is located along the coastal zone facing the Indian Ocean, 32 km north from the centre of Colombo City. BIA is operational for 24 hours each day and is managed by the state-owned Airport and Aviation Services (Sri Lanka) Ltd. (AASL). The technical details of the BIA are given in Table 17: Table 17: Outline of Existing Airport Facilities Item Description Airport Reference Point Long. 079 0 53’ 07” E, Lat. 07 0 10’ 49” N Elevation 9 m above sea level Aerodrome Reference 32.3 0C Temperature Operating Hours 24 hours a day all year Administered by Airport and Aviation Services (Sri Lanka) Ltd. - Length 3,350 m x 45m with 7.5m shoulders Runway - Pavement Asphalt concrete + PFC surface - Runway strip 3,470 m x 300 m; PCN 85/F/B/X/T - Number 5 nos. exit taxiways. - Configuration Parallel (200 m between centre-lines) Taxiways - Dimensions 30 m x 3,350 m with 7.5 m shoulders - Pavement Asphalt concrete - Strength PCN 85/F/B/X/T - Number 5 nos., 1 domestic and 1 maintenance - Configuration 3 nos. passenger; 1 no. passenger and cargo and 1 no. Aprons maintenance aprons. - Area 168,500 m sq m. - Pavement Cement concrete - Strength PCN 70 to 55/R/B/X/T Passenger Passenger Ground floor area: 34,184 sq m Terminal Terminal First floor area: 23,788 sq m Building Parking area for 25 aircraft served by buses Pier 10 air bridges with 8 gate lounges; total floor area: 17,700 sq m. Cargo UL Terminal #1 Total floor area: 12,610 sq m Terminal Export Terminal Total floor area: 2,040 sq m Building Cargo Village #1 Total floor area: 5,700 sq m Cargo Village #2 Total floor area: 2,817 sq m. Cargo Village #3 Total floor area: 5,100 sq m UL Terminal #2 Total floor area: 10,800 sq m. Vehicle 3 Nos. 15,176 sq m: Capacity 57 coaches and 672 other Parks vehicles. Fire Rescue & Fire Category 9 Fighting

29 Item Description Aircraft Total 6 units: Sri Lankan hangers Maintenance Hanger Radio PSR - L band, ILS CAT -I: (LLZ, GP/DME , OM&MM); Navigation & MMSR, TRDPS, VHF A/G; AFTN; DVCSS Air Telecommunicat Navigatio ion n System Aeronautical PALS -CAT -II, PAPI Ground Lights Metrological AWOS, Windsock, Anemometer Observation

(Source: Airports & Aviation Authority of Sri Lanka)

3.2 Seaports – Description of Port Industry

3.2.1 Port of Colombo

The Port of Colombo is the country’s principal port and is on the West coast of the island at latitude 60-57’N and longitude 79-51’E. It is a man-made harbour enclosed between the north side of the Fort and Mutwal point, with three breakwaters that were developed from 1875 to 1912:

i) South West Breakwater 1248 metres;

ii) North West Breakwater 550 metres; and

iii) North East breakwater 305 metres.

At the end of the Second World War, the Port was developed with alongside berths to adapt to the new change of handling cargo. A Container Terminal was built to handle the containerization of seafreight by extending the Queen Elizabeth Quay with the addition of four container berths at the JCT and three more at the SAGT between the years 1969 to 1980. The harbour area is 225 hectares in extent at low water and the land extent within the port is 103 hectares.

Vessels can enter through two entrances - the west entrance is the main entrance with a single ship access of 230m wide and 15m deep and the North entrance is 185m wide and with a depth of 13m. The harbour basin is dredged to a depth of 15 m with a turning circle of 450 m and a stopping distance of 1000 m.

3.2.1.1 Terminals, Berths, Quays & Other Facilities

The port has several terminals and quays that are summarized as follows:

30 Berth Total Alongside Length (m) Draught (m) Jaya Container Terminal 1,290+350 12.00-15 South Asia Gateway Terminal 940 15.00 Unity Container Terminal 390 7.5-11.00 Multi -Purpose berth (Unity) 200 7.5 -11.00 Passenger Terminal 200 9.50 Bandaranayike Quay 920 7.20 -9.45 Coaster Berths 185 4.8 -6.10 Prince Vijaya Quay 330 9.15-9.45 Guide Pier 330 8.00-9.15 South Pier 160 9.15 a) Jaya Container Terminal (JCT)

Jaya Container Terminal has four container berths with a quay wall length of 1292m and two feeder berths, one in the south of length 180m and 172m length in the north.

The alongside lengths, the breadth and the depths of the four container berths are as follows: i) JCT1 300m x 350m x 12m; ii) JCT2 332m x 350m x 13m; iii) JCT3 330m x 350m x 15m; and iv) JCT4 330m x 350m x 15m.

The other facilities available at JCT are: • 4 container Berths + 02 Feeder Berths; • 1.292 meters of Main Quay Wall + 350 meters of Feeder Berths Quay Wall; • 12 to 15 meters of dredged depth; • 14 quayside Container Cranes (Panamx and Super Post Panamax); • 39 Container Transfer Cranes (RTG); • 4 Rail Mounted Empty Stacking Cranes (RMG); • 45.5 hectares of Container Terminal Area; • 44,120 TEU Dry Container Stacking Capacity; and • 1,548 TEU Reefer Container Stacking Capacity.

JCT has repair facilities to maintain the container and transfer cranes on a 24 hour basis. Workshop facilities are also available to repair prime movers and trailers. Electrical maintenance is handled separately by the electrical workshop. The Stacking Capacity of the JCT is summarized as follows:

31 Type No. of Slots Stacking Height Capacity (TEU) Dry Containers JCT1 (RTG) 1,980 One over three 7,920 JCT 2 (RTG) 2,184 One over three 8,736 JCT 3 (RTG) 2,376 One over four 11,880 JCT 4 (RTG) 1,560 One over five 7,800 Empty Stacks (RMG) 814 One over seven 6,512 Top Lifter 318 One over three 1,272 Total Container Capacity 9,232 44,120

Reefer Containers JCT1 72 One over one 144 JCT 2 72 One over one 144 JCT 3 108 One over two 324 JCT 4 213 One over two 936 564 1,548 b) South Asia Gateway Terminals (SAGT)

The SLPA has leased the Queen Elizabeth Quay (QEQ) to terminal operator SAGT for 30 years on a BOT basis. The quay has been widened 100m on piles eastwards into the harbour basin to accommodate a passenger berth of 250m and three container berths, having a total length of 1005m. They have 15m depth alongside.

The container berths have 9 Super Post Panamax container cranes and terminal with 27 transfer cranes. The total container terminal area is 22.2 hectares giving a dry container stacking capacity of 26,250 TEUs and a reefer stacking capacity of 900 TEUs. c) Unity Container Terminal (UCT)

The terminal is located on the south quay of the New North pier. There are two berths, the length, width and depth are as follows: i) South Quay Berth1 130m x 100m x 9m; and ii) South Quay Berth 2 210m x 100m x11m,

The North Quay of the pier has a berth which has the following dimensions:

(i) North Quay Berth 200m x 25m x 11m.

There are also pipelines to the Mahaveli Marine cement silos adjacent to the pier. The pier has a total area of 3.9 hectares and 3.2 hectares of land with five high container storage capacities. Summary of facilities available at the UCT are given as follows:

32 Unity Container Terminal (UCT) 2 Container Berths; 1 Multi Purpose Berth; 9.0 m – 11.0 m Dredged Depth; 3 Nos. of Quayside Container Cranes; 8 Nos. of RTG ; 50 Units of Prime Move rs; 590 meters of Quay Wall ; 1.53 hectares of Container Terminal Area ; 8,000 TEU Stacking Capacity; and Inter-Terminal Road Link with JCT & SAGT. d) Bandaranaike Quay

The Bandaranaike quay has five berths for break bulk cargo. They are east quay, west quay, north quay and two coast berths. The respective lengths and depths are as follows: i) East Quay Berth 422m x 9.45 m; ii) West Quay Berth 412m x10.06m; iii) North Quay Berth 130m x10.97m; iv) Coast Berth 1 100m x 8m; and v) Coast Berth 2 85m x 6m e) Feeder Berth

This berth is adjacent to the JCT, recently constructed to accommodate vessels of 10,000DWT. This is a concrete piled structure trapezoidal in shape with a length of 193m, 57m at the land end, 16m at the sea end with a depth of 10m. The total area is 6,788 sq m. f) Prince Vijaya Quay

This quay located to the South of UCT is used mainly to discharge bulk cement to the Mahaveli Marine and Samudra cement silos and also maize in bulk to the grain elevator silos. Break bulk cargo and general cargo are also handled in this quay.

3.2.1.2 Other Facilities

i) The Sri Lanka Navy has a land area of 1.021 hectares with mooring facilities for their Fast Attack Crafts and Gunships;

ii) The Oil Jetty is located in the North West (island) Breakwater. The Jetty is 90m in length with a depth of 11m. There are submarine pipe lines with 24” line for crude oil and 12” line for bunkering from jetty to shore. Fuel is supplied to vessels berthed inside the harbour and outside by barge owned by Lanka Martime Services;

33 iii) Guide pier of length 330m has two berths alongside with depths of 8m and 9.5m. It is also used by the Colombo Dockyard Ltd to move vessels to the dry docks for maintenance and heavy repairs situated at the East end. When not in use for docking activities it is used by the SLPA for handling break bulk, general cargo and car carriers. Edible oils are loaded from this pier by pipelines from ship to shore and vice versa to the storage tank farm situated within the port premises; and

iv) The Colombo Dock Yard Ltd undertakes heavy repairs of vessels up to 125,000 DWT and boat building activities at 4 dry docks and 11 repair berths in a 9 hectare block of land north of the Jaya Container Terminal.

3.2.2 Port of Galle

The port of Galle is located in the Galle bay at latitude 60 01’ N and longitude 82 12’. It is the only operational port in the South of the country and is 120km by road from the port of Colombo on the South west Coast of the country. The entry and exit from the bay is difficult due to under water rocks and reefs creating rough swells during the south-west monsoon season.

The Galle port existed as the only port in the island until 1890s, when activities were transferred to the Colombo port. Export cargoes such as tea, rubber and copra (traditional plantation crops) and imports of rice and sugar were handled in the Galle port up to 1930s from the jetties located near the Dutch Fort. The present port was constructed in 1971 by bridging the Closenburg Bay with Gibbot Island to form the main breakwater behind which the land was reclaimed for the construction of a quay and warehouses. A fishery harbour was constructed on the Northern side of the breakwater.

The quay wall is of 420m length starting from the root of the breakwater. The width of the entrance to the harbour is 152m. From the western end there is a shallow water quay of 60 m meant for smaller crafts, the remaining length having a depth of 9m. In the north-east part of the harbour is a jetty of length 160 m and a wharf of 86 m dredged to a depth of 9 m. The longer berth could accommodate 8,000DWT vessels.

Two warehouses meant for food cargoes have capacities of 2,000 sq m and 4,000 sq m respectively. The land behind the two warehouses is leased to two cement companies for bagging bulk cement imported by bulk carriers. There are pipelines connected directly to silos of the cement packing plants.

The main users of the port at present are the two cement companies Holcim Lanka Ltd and Ambuja Cement Ltd. The former imports clinker and gypsum in bulk and process them to cement bags and the second company imports cement in bulk for bagging.

34 3.2.3 Port of Trincomalee

The Port of Trincomalee has an Inner Harbour and an Outer Harbour located in the east of the country. The Outer Harbour comprises of Trincomalee Bay, which has the approaches to the harbour, and the Koddiyar Bay. The Inner harbour is on latitude 80:31’ N and longitude 81:15’E. The water area is 2,023 hectares and the land area is 5,261 hectares.

Trincomalee harbour was a British Naval Base taken over by the Sri Lankan Government in 1956. The Harbour is surrounded by high cliffs on the sea side and is well protected from the monsoon winds. The waters of the harbour can accommodate a large number of vessels and has a water depth that permits movement and berthing of small, medium and large deep drafted cargo ships, oil tankers and super tankers.

The infrastructure within the harbour includes roads and railway facilities. The SLPA is in administrative control, except for the naval base in Ostenberg Ridge. The China Bay is occupied by the Army and there is an Airforce Base.

35 4 RELEVANT CONFIRMED SECTOR DEVELOPMENTS

4.1 Aviation

The BIA has been developed in stages. The first significant development effort was between 1984 and 1988 as the Phase I Development of the Masterplan formulated in 1981, and the passenger terminal building was constructed under the financial assistance of Overseas Economic Cooperation Fund (OECF) of Japan. Due to certain constraints especially in the passenger terminal buildings and that the initial cargo forecasts were exceeded by the year 1995, the Government of Sri Lanka in 1999 intended to implement Phase II Development based on the Masterplan with financial assistance under the 32 nd Yen Loan package (???). As a result, the development has been earmarked into 2 stages (Stage 1 and 2). Stage 1 which consists of improvements to the passenger terminals, addition of cargo terminal space, rehabilitation of runways and the construction of a passenger pier and air bridges has just been concluded.

Presently, a feasibility study is being carried out funded by the OECF for Stage 2 of the Phase II Masterplan. This study envisages the development of BIA with a second runway, as well as expansion of the passenger terminals.

Table 18 of this report summarizes the estimated timing of overflowing capacity of each facility of the existing airport in the light of target years of demand forecasts as given in the Feasibility Study Report for Phase II (Stage 2) development. Table 18: Estimated Capacity Requirements of Existing Facilities up to 2025

Facility Remarks Runway Capacity will be sufficient up to 2025.

Taxiway Rapid Exit will be required in the year 2025. Apron The capacity will be sufficient up to 2010. Passenger Terminal Building Capacity will cope with the demand up to 2010. Airline Cargo Building Capacity will be sufficient the demand up t 2015. Forwarder Cargo Building Capacity will be sufficient the demand up to 2015. Capacity would not sufficient, if the security situation improved and Access Road thus the demand increased . Car Park Capacity is overflowed at peak hours. Rescue & Fire Fighting Aerodrome category meets the requirements. Aviation Fuel Supply Storage capacity of depot meets the demand up to 2010. Power Supply Main power house and ring mains will be sufficient up to 2015. Water Supply Capacity is insufficient. Sewage Disposal Total capacity meets the demand up to 2015. Solid Waste Disposal New incinerator will be installed by ongoing project. Telephone Services Capacity will be sufficient up to 2020.

36 The facilities that will be inadequate within the next 5 years, e.g. by around 2010, are identified as the passenger terminal (building and apron), car parks, air navigation systems and utilities (i.e., power, water, sewage).

4.2 Maritime

Sri Lanka is a major transhipment hub for the region. It has a natural advantage due to its geographical location and historically seafarers have been calling on the port of Colombo for hundreds of years. Traditional exports such as tea, rubber and coconut were the reason in the early years but later the island became known for its rich spices such as cinnamon, cardamom, pepper, cloves etc. which further boosted traffic. The Portuguese, the Dutch and the British rule of then Ceylon was another reason for the hive of maritime activity.

The SLPA has Business Plans, and feasibility studies have been executed on the Port Sector from time-to-time. In particular, the request by the Government of Sri Lanka to the ADB to formulate a Port Sector Master Plan was an important one and was concluded successfully in February 2004. This study outlined expansion plans for the coming ten years.

Sri Lanka as a whole is considered in this ADB-assisted study with respect to the future demand for break bulk and dry bulk cargoes. Population sizes and economic activities both present and future in the provinces of the country have been taken into account. The regional development plans in the pipeline, such as the expansion of the southern part of the country with major Highways planned for construction that could offer alternative modes of freight transport, have been analysed. A blueprint for expansion of the Eastern province for accelerated growth in the region was also a factor that has been considered.

Seven study Ports have been targeted. In addition to the three ports of Colombo, Galle and Trincomalee referred to earlier in section 3.2, Hambantota in the Southern province, Kankesanthurai and Point Pedro in the Northern Province and Oluvil in the Eastern province were looked at, although some of them not in any serious depth due to the prevailing security considerations.

A summary of the recommendations by the consultants with respect to the projects, the new facilities to be implemented is given in Table 19.

37 Table 19: Identified Port Development Projects Project New Main Facility 1. Colombo South Harbour 16m Quay, 12 Terminals 2. Galle Regional Port 2 Multi Purpose Berths (12m) 3. Bandaranaike Feeder Berth 2 Feeder berths (10m) 4 4. Kankesanthurai Port Rehabilitation Wreck removal & Rehabilitation 5. Point Pedro Regional Port A Jetty with two Berths (7.5m) 6. Trincomalee Expansion 1 Multi Purpose Berth (13m) 7. Oluvil Regional Port ( Stage I) 1 Multi Purpose Berth (8m) 8. Hambantota Industrial Port Seasonal Jetty for Coal Unloading

(Source: Sri Lanka Ports Authority & consultants reports)

These have been recommended for implementation over a time period of ten years. It is forecast that the container demand at the Colombo Port is likely to exceed the total capacity of the existing terminal by the year 2010. If the Phase I facilities of the Colombo South Harbour project are to be operational by 2010, then the construction works must be commenced by 2006 at the latest. Improvements in the current levels of productivity will have to be enhanced, as well renovations of existing facilities have been recommended by the study team. a) Colombo South Harbour Project

There are two scenarios for the future projections of the container traffic in Colombo. 3.5 million TEUs in 2009, 4.8 million in 2012 and 22.7 million in 2040 are reported if there are major reforms in policy, high level of productivity and if security considerations are fully addressed. An alternative scenario of lower level of economic growth, productivity constraints and lack of adequate port reforms would result in only 2.6million TEUs in 2009, 3.5million in 2012 and 13.4 million in 2040. The report also says that the existing capacity of Colombo port could be enhanced to a maximum of 3.6million TEUs, though other analyses estimate the ultimate capacity at 3.3 million TEUs with a Berth Occupancy Ratio of 55%.

The development of the Colombo South Harbour is to be in two stages for the Phase I of its plan. The first stage is for the development of its basic infrastructure for the construction of breakwaters, construction of the channel access to the port, facilities for inland transport , and the procurement of harbour craft with public funds. The stage two of the development is for terminal construction, inner port channel construction, turning and port basin construction, the procurement of the terminal equipment and the remaining infrastructure, all to be undertaken by either the SLPA or terminal operators.

4 Since, December 2005, plans for the Bandaranaike Feeder Berthts are being revised along with revised pans for the Hambantota Port, however these plans are not finalised as yet.

38 The proposed CSH will be located west of the present south-west breakwater in an area of approximately 600 hectares. It will have twelve berths and a harbour basin area of 290 hectares. Vessels of overall length of 400 m, beam of 55 m and draft of 16 m could be accommodated. There will also be 4 container terminals with a quay length of 1,200m each to accommodate 3 berths with an 18 m draft. The channel width of the harbour is to be 560 m and a depth of 20 m with a harbour basin with a 600 m turning circle with a 18m depth. The ADB provided a US$ 10 m loan for consultancy services under the ‘Colombo Port Efficiency Improvement’ Project and the feasibility study including designs are now completed. b) Galle Regional Port

The Galle Port is to be established as a cost effective transportation means for the Southern Region by serving as an important entry and exit point. Two multipurpose berths with a water depth of 12m are proposed to contribute to the industrial activities in the hinterland. This is also in view of accommodating cruise vessels to cater for regional tourism in the future. Funding for the development of the Port of Galle, based on the JICA Masterplan, was pursued by the SLPA during the year 2004. The proposed harbour would consist of a 1150 m breakwater, 220 m revetments and 2 berths each of 240 m in length and with a draft of 12 m. c) Kankesanthurai Port Rehabilitation and Point Pedro Regional Port

These are two ports in the North of the island. Ethnic conflict has been experienced for more that twenty years now. These two ports are essentially to minimize the transportation costs of necessities to be consumed in the north. Rehabilitation of the KKS Port and the development of the PPD are proposed do enable these ports to be designated regional ports. A Dutch consortium, on the recommendation from the Netherlands embassy, has commenced a feasibility study of the KKS harbour. This study funded by a grant from the Netherlands will cover the areas of sunken vessels, dredging of the harbour and breakwater and pier repairs. This works has been expedited after the Tsunami damage. At PPD port the existing jetty has a draft of only 2 m and is poorly constructed and major repairs are needed. d) Trincomalee Expansion

The study team recommended that an expansion programme of the Trincomalee Port should begin around 2010 when peace prevails in the North and East. Significant demand for reconstruction is expected in the region. The Ashraff Jetty at the Trincomalee port is earmarked for expansion together with the waterfront land used along the Trincomalee Bay. e) Oluvil Regional Port

Oluvil port is planned as a phased development and stage I construction works are to be commenced immediately according to the study team’s recommendations.

39 f) Hambantota Seaport

A consultancy service had been commission to investigate the potential development of the Hambantota seaport for bunkering facilities. It is proposed to develop a Single Point Buoy Mooring System in mid sea approximately 2 km from the shore line at approximately 25 m water depth. Underground and under-ocean pipelines would transfer the products to and from the tankers in the ocean. Sites have been located for the of shore storage facilities. However, since of December 2005, there are plans to upgrade the port to an Service/Industrial Port with a 1.8 km breakwater and 12m draft. The estimated cost is now US$ 125 million.

The total estimated expenditure for all the identified projects given in Table 19 initially estimated as Rs. 95 billion to be shared as a Public and Private sector investment. The time line for completion of all the projects is by end 2012.

In addition to these projects the SLPA expects the following actions to be performed in the logistics management system:

• Introduction of MCC Cargo in to all other warehouses that are vacant;

• Provision of more facilities for MCC and bonding cargo operations;

• Introducing electronic E-commerce systems;

• LCL de-stuffing would be done within 36 hours;

• Further reduction in documentation and procedures; and

• Customer-oriented total solutions for deliveries.

4.3 Rail

The Sri Lanka Railways has identified several rehabilitation projects on its network. Most of such projects include track upgrades to enable operation of trains at average speeds of 80 kms per hour. From a regional perspective, the most important railway project that has been initiated is the construction of an express railway link between BIA (international airport) and Colombo City- a distance of 32 kms. The feasibility for this project has yet to be carried out. The Government has entered into a MoU with the Chinese Government to obtain concessionary funding for this project .

4.4 Road

The RDA has been engaged in the implementation of several foreign-funded projects covering new construction of major highways, rehabilitation of roads and taking measures to reduce road congestion. The Southern Highway project is presently in progress at an estimated cost of US$ 290 million funded separately by the Asian Development Bank (ADB)

40 and Japanese Bank for International Cooperation (JBIC). The construction work of the ADB funded (southern) section of the Southern Highway commenced in early 2003 and is expected to be completed by late 2006. The JBIC funded (northern) section is scheduled to be commended in 2005.

The proposed Colombo – Katunayake Expressway project, which is to connect the International Airport (BIA) with the City of Colombo, has yet to formally commence and its funding is planned as a Public Private Partnership (PPP).

The Colombo Outer Circular Highway with an estimated project cost of around US$ 160 million is at the stage of completing the survey mapping. The Colombo – Kandy Expressway is expected to be implemented on a BOT basis with the assistance of the Malaysian Government at an estimated cost of US$ 290 million.

The implementation of these new limited access highways will improve mobility between provincial centres in Sri Lanka. This network of new highways would be the base for a future connection to the proposed Asian Highway Network.

4.5 Ferry Transport

Even though there has been interest shown by the private sector to resume two ferry services between Sri Lanka and India. Both governments recently (2004) indicated their approval in principle to a re-launching of this service, but concerns by the government of Tamil Nadu State about security matters have so far prevented its re-commencement.

41 5 ISSUES/CONSTRAINTS TO INTRA-REGIONAL TRANSPORT

In addition to the identification of the issues/constraints to intra-regional transport connectivity, suggestions of possible ways to resolve these where appropriate have been included.

5.1 Aviation

5.1.1 Infrastructure

The facility requirements as identified by the Feasibility Study for Phase II, for the design requirements of year 2020 are summarized in Table 20. Table 20: Summary of Infrastructure Requirements at BIA for year 2020

Facility Unit Additional Remarks Requirement Passenger Terminal Building • Departure Passenger Processing Area m2 27,177 Including new pier building • Arrival Passenger Processing Area m2 14,716 • Baggage Handling Area m2 9,300 Sub-Total m2 51,193 Cargo Terminal Medium Case Cargo Terminal Building m2 12,423 Forwarder Cargo Building m2 20,384 Sub-Total m2 32,807 Apron Stand 12 Car Park lots 920 Air Navigational Facility ls - ILS, VOR/DME, PSR/SSR, etc. Fire Fighting and Rescue Services ls - Category will be 10 in 2008 Aviation Fuel Supply System kl/day 1,752 Utility Facility • Power Supply System kVA 9,852 • Water Supply System kl/day 3,352 • Sewage Treatment System kl/day 947 • Telephone System lines 1,440

(Source: Airports & Aviation Authority of Sri Lanka)

5.1.2 Services

Capacities of the existing facilities are given below in Table 21. The additional requirements as estimated by the Feasibility Study for Phase II for the year 2025 are given in Table 22.

42 Table 21: Capacity of Existing Passenger and Baggage Handling Facilities

Facilities Number or Size Capacity Departure Passenger Processing Area Security Check-In 03 nos. 818 pax/hr Check in Desks 40 nos. 991 pax/hr Check in queuing area 1,207 sq. m. 4,389 pax Departure Passport Control 12 Counters 1,090 pax/hr Security Check- Bus Gate 03 nos. 1,090 pax/hr Security Check- Pier 06 nos. 2,000 pax/hr Bus Gate Lounge 6 Rooms 1,320 pax Air Gate Lounge 8 Nos. n/a Arrival Passenger Processing Area Arrival Passport Queuing Area 366 sq m 1,464 pax Arrival Passport Control Desks 16 nos. 1,380 nos. Baggage Claim Area 2,148 sq m Baggage Claim Devices 4 nos. 5 flights Arrival Customs Channels 23 nos. Arrival Concourse Waiting Area 684 sq m. 829 pax

(Source: Airports & Aviation Authority of Sri Lanka ) Table 22: Summary of Facility Requirements for Passenger Terminal (2025)

Requirements for Item 2005 Departure Passenger Processing Area Departure Curb 112 m Departure Hall 2,048 m2 Security Check Units before Check -in 6 units Check-in Counter - 3 islands 54 counters Check-in Lobby 1,609 m2 Departure Passenger Passport Control Counters 22 counters Departure Waiting Area (Departure Lobby) 2,213 m2 Executive Lounge 1,370 m2 Security Check Units at Pier ‒ Centralized 6 units Departure Airside Concourse 3,050 m2 Gate Lounge 2,843 m2 Bus Lounge 788 m2 Fixed Bridge 5,400 m2 Arrival Passenger Processing Area Arrival Airside Concourse 3,050 m2 Arrival Bus Station Hall 188 m2 Arrival Passenger Passport Control Counters 22 counters Baggage Claim 6 devices Arrival Customs Counters 14 counters Arrival Hall 2,292 m2 Arrivals Curb 112 M

43 Item Requirements for 2005 Baggage Handling Area Departure Baggage Make-up Area (Ground Floor) 2,858 m2 Arrival Baggage Breakdown/Sorting Area (Ground Floor) 1,730 m2 In-line Hold Baggage Screening Area (Basement Floor) 4,712 m2

(Source: Airports & Aviation Authority of Sri Lanka; Consultants Reports)

5.1.3 Qualitative Responses

This section covers the responses given by leading professionals, the industry and officials of the aviation sector, a summary of which is given in Table A9 & A10. Accordingly, the aviation industry sees no major constraint with respect to the airport infrastructure as such. However, a number of other aspects were highlighted as constraints and these are discussed in the paragraphs below.

High Ground Handling Charges : As the exclusive rights for ground handling have been given to the national carrier, the high level of their ground handling charges are considered to be discouraging other carriers from calling at BIA. While this is to the commercial advantage of the particular carrier, this monopolistic situation may be constraining the overall growth of passenger traffic arriving at BIA, and therefore the progress of connectivity to other SAARC countries. However, the monopolistic situation which has been given to Sri Lankan Airlines is to be terminated from 31 st March 2008. Thereafter, the Government will be in a position to create another ground handler in order to provide a competitive environment and consequent reduction in ground handling charges.

Ground Access to BIA : The fact that BIA is 32 kms from the commercial centre of Colombo and not in close proximity to any centre of tourist attraction has not enabled BIA to develop to its full potential as a transit point. The difficulty in ground access to Colombo city by road and the absence of a reliable and comfortable railway connection considered a major drawback. Moreover, the slow road network even to reach other places of tourist interest, such as Kandy or Anuradhapura or Sigiriya, is also a problem in relation to attracting transit passengers with stopover packages. This is seen an impediment for passengers especially from the Maldives, southern India and Bangladesh. However in this situation too, initiatives taken by the Government in planning for the Colombo-Katunayake highway as well as the express train link augurs well.

Low Cost Carriers: Given that the per capita incomes of the vast majority of people in most SAARC countries is well below that which enables air travel, it is considered most advantageous to introduce low-cost airlines in the SAARC region to tap in to this vast market. It is held that such an initiative would result in a phenomenal increase in air travel within the SAARC region. The Government has already taken some initiatives in this regard

44 with the Civil Aviation Authority having granted provisional license for 3 local operators to to commence operations to Indian destinations for a pre determined period in order to evaluate their performance. These operators come under the category of low cost operation and is expected to enhance capacity as well as reduce costs even further to Indian destinations. .

Full-fledged Open Skies policy for Passenger Travel : Presently, most passenger air services within SAARC countries are operated under bilateral agreements. With the exception of Maldives, all other bilateral agreements with Sri Lanka stipulate traffic restrictions to other destinations by restricting 5 th freedom of traffic rights. This hinders the commercial viability that could sustain the development of air services between points in SAARC countries that may have lower traffic loads at present. For example, Sri Lankan Airlines would like to operate to Kathmandu via New Delhi, while Nepal stipulates flights only through Kolkota, which is considered to be uneconomic for the any of the designated carriers of Sri Lanka. Similar problems exist for services to Dhaka for which there is a bilateral agreement, but no direct flights are operating at present.

Liberalization of Air Services : Another persistent problem in the region has been identified as the protection offered to State-Owned airlines, especially when it is the foremost designated airline of a country. The consequent need and opportunity to monopolize a given market does not permit other smaller carriers to enter and offer lower cost service. This is considered a major impediment for developing air routes connecting Sri Lanka to other SAARC destination to its true potential. This is well-illustrated by the rapid growth of air travel with India since 2001 that has topped 45% p.a., when carriers other than the two state owned airlines were designated as national carriers. The fares on most routes have reduced, while frequencies have tripled and destinations have doubled from 5 to 10.

5.2 Maritime

5.2.1 Infrastructure

The present capacity could be enhanced by taking positive measures to introduce new equipment, expansion of yard areas, denser stacking and reduced dwell time. Whilst operational enhancements can be made to the existing terminals, the area of water in the existing harbour is limited and it is difficult and dangerous to manoeuvre more than one ship at a time in the basin. The capacity of the existing harbour is governed by marine operations that limit movements by cargo vessels to about one per hour rather than the quay cranes or yard capacity. As a result the study team has computed that the practical capacity of the existing harbour is estimated to be 3.3 million TEUs per year. Therefore a new outer harbour will be required if congestion and delays are to be avoided.

45

Table 23: Existing and Potential Enhanced Capacity of Existing Terminals (TEUs)

Terminal Present Potential Enhanced Capacity Capacity JCT 2,000,000 2,400,000 SAGT 1,000,000 1,200,000 UCT 300,000 300,000 BQ N/A 200,000 Total 3,300,000 4,100,000

(Source: Sri Lanka Ports Authority)

5.2.2 Services

Although it is acknowledged that major policy reforms are necessary in the port sector, specific action is being taken even though at a slower rate for practical reasons. It is the opinion of the study team that there is room for proactive reforms. The SLPA had identified the efficiency improvements necessary as a high priority. The targets set to be achieved earlier are as follow 5s: • Increase gross crane productivity up to 30 moves per hour; • Increase berth productivity by 10%; • Reduce ship turnaround time by 10%; • 24 hour x 7 x 12 operations; • Reduce non-operational time by 2 hrs per day; • Implement new Terminal Management System; and • Paperless transactions through workflow IT systems. The study team is of the opinion that the current productivity is a serious issue when compared with global terminal standards and best practice and thus it is necessary to formulate a human resource development strategy.

5.2.3 Industry Responses

Industry experts were quick to highlight that there are serious constraints that need to be addressed almost immediately. These constraints were indicated as follows:

a) The demand will outpace capacity by the year 2008. Terminals and equipment need to be upgraded;

5 With the change in administration, there targets may have been differently prioritized. Precise positions are not know at time of writing.

46 b) The immediate need for expansion of JCT and UCT without channel congestion. ‘Without channel congestion’ was emphasized;

d) Post panamax vessels have a 15m draft and thus dredging by an additional meter is an immediate requirement; and

e) Unless the Colombo South Harbour development project is launched as soon as possible, the 5 th generation vessels with their greater lengths and draft can not be handled.

According to sector experts and industry representatives, there are also many high level administrative issues that need to be addressed: a) Policy reforms are necessary; b) Lack of consistency in relation to development policy; c) Frequent changes in top management due to changes of Government; d) This leads to no continuity in implementation of plans; e) Even though downsizing of labour was initiated with 4000 compensated to retire once again haphazard recruitment has recommenced : f) Colombo Port has to be transformed into a Mega Hub-port though this is considered easier said than done; and g) SLPA is operating as stand-alone organisation and should link with Multi Port Service Delivery leaders.

These issues need to be addressed at the highest levels, but no serious efforts have yet been made to kick start development due to an absence of a ‘champion’. Nobody has taken the necessary ‘ownership’, as the Executive and the legislature are preoccupied with other pressing problems. Lack of funding is a major issue because it is often tied to conditions by the donors for reform and demanding transparency.

5.3 Ferry Transport

The bilateral agreement that was in place before the suspension of the ferry services between Sri Lanka and India has not been resumed. There is a need for renewal of such an agreement in the interests of passenger travel.

5.3.1 Infrastructure

Some pre-feasibility studies that have been carried out in the last few years indicate that a new ferry crossing along with the necessary infrastructure, such as quays and buildings, would be necessary to accommodate modern ro-ro passenger vessels. A detailed feasibility

47 study would need to be carried out to ensure that such a ferry could operate year round, unlike the earlier ferry that operated only part of the year due to the monsoon.

5.3.2 Services

The initial studies indicate that an investment of around US$ 10 million would be required to commence such a service and that ship operating costs would be around US $1.1 million.

5.4 Land Transport

As discussed in earlier sections, there exists a need for a land bridge between Sri Lanka and India so that the road and railway networks in Sri Lanka can be connected to the Asian Highway and the Trans Asian Railways. While a ferry service could partially fulfil this, with the increasing trade and cultural ties the need for a land bridge would be a necessity in the near future.

48 6 TRAFFIC FORECASTS

6.1 Aviation

6.1.1 Passenger – Overall National

As mentioned earlier, there is only one international airport in Sri Lanka the Bandaranaike International Airport (BIA) at Katunayake. Air Traffic at BIA has steadily increased with an average annual growth rates of 7.9 % for international passengers since 1990. The demand for Sri Lankans travelling abroad has been 7.2% per annum, while tourist arrivals have been growing at a slower rate of 4.7% p.a. In particular, the growth rate for 2003 and 2004 is remarkably high with both tourist and local travel showing high growth. The passenger traffic records at BIA since 1990 are shown in the Table 24. This also indicates the growth in transit passengers at 26% per annum during the last six years. Table 24: Historic Air Passenger & Aircraft Traffic at Bandaranaike International Airport (1990-2004)

Sri Tourists Transit Annual Aircraft Annual Total Year Lankan Growth Movements Growth Passengers 1990 875,935 595,776 1,471,711 - 17,864 - 1991 886,066 635,406 1,521,472 3.4% 18,110 1.4% 1992 1,009,995 787,338 1,797,333 18.1% 19,772 9.2% 1993 1,109,319 784,500 1,893,819 5.4% 20,481 3.6% 1994 1,341,115 815,022 2,156,137 13.9% 20,960 2.3% 1995 1,428,760 806,202 2,234,962 3.7% 19,495 -7.0% 1996 1,544,048 604,530 2,148,578 -3.9% 20,722 6.3% 1997 1,586,942 732,330 2,319,272 7.9% 22,568 8.9% 1998 1,438,542 762,126 156,168 2,356,836 1.6% 24,055 6.6% 1999 1,542,132 872,880 233,768 2,648,780 12.3% 27,140 12.8% 2000 1,737,019 800,828 342,540 2,880,387 8.7% 32,123 18.4% 2001 1,624,794 673,588 329,661 2,628,043 -8.8% 26,363 -17.9% 2002 1,718,881 786,342 260,941 2,766,164 5.3% 25,276 -4.1% 2003 1,854,913 1,001,284 376,565 3,232,762 16.9% 27,937 10.5% 2004 2,330,092 1,132,404 607,225 4,069,721 25.9% 35,161 25.9% Average 7.2% 4.7% 25.4% 7.9% 5.49% Growth

(Source: Airports & Aviation Authority of Sri Lanka)

The tourist arrivals from SAARC countries are given in Table 25. This shows that the growth in travel to/from all SAARC countries except that of Pakistan has grown at a steady rate. Travel to India shows a phenomenal 34.8% growth over a five year period, presumably because of the expansion in new destinations.

49 Table 25: Tourist Arrivals from SAARC Countries (2000-2004)

Origin No of Tourist Arrivals per year 2000 2001 2002 2003 2004 Growth % p.a. Bangladesh 1,218 1,745 1,521 1,830 1,953 12.5% India 31,860 33,924 69,960 90,603 105,151 34.8% Maldives 7,935 9,019 9,861 11,583 15,463 18.2% Nepal 534 508 789 980 1,004 17.1% Pakistan 10,005 8,562 6,756 9,704 9,638 -0.04% Bhutan n/a n/a n/a n/a n/a n/a

(Source: Airports & Aviation Authority of Sri Lanka)

Growth of air traffic demand is in general correlated to the growth of the aggregate economy. For travel pertaining to Sri Lankans travelling abroad, as well as business travel, this is particularly true. However, for tourism and other leisure related travel other factors such as security has had an impact in the travel. This was widely seen in the mid 1980s followed by the terrorist attacks in 1996 in Colombo and also the 2000 attack at the BIA.

The following combinations of explanatory variables have been used for forecasting in the Feasibility Study for the BIA Development Project- Phase II (SAPROF Team, OECF Team, November 1998). They have used combinations of variables such as:

• Sri Lanka GDP;

• Foreign Countries GDP; and

• Terrorism Index.

The model with the best fit is given as follows:

1.442112 0.019790 -0.046059 Y = exp (-2.694157) * X 1 * X 2 * X 3

Where, Y is the total passengers for the year, X1 is the GDP of Sri Lanka in constant Rs million, X2 is the aggregated average growth rate weighed by foreign countries GDP (1985 = 1.0) and X3 is the Index of Terrorism, adjusted by the method of ‘centring repeated 3 term moving average.’

The final forecast results made in this study in 1998 are given in Table 26. However, when comparing the actual figures for the year 2003, it is observed that only the low projection was reached. The primary reason for this has been the set back due to the terrorist attack on the BIA in the year 2000 and the subsequent pulling out of several carriers.

50 Table 26: Forecast Results of Total Passenger Movements at BIA (2003-2013) 1997 2003 2008 2013 High 3,994,527 6,036,959 9,139,613 (9.5%) (8.6%) (8.7%) Medium 2,319,272 3,662,885 5,160,607 7,288,952 (7.9%) (7.1%) (7.2%) Low 3,220,640 4,129,285 5,090,607 (5.6%) (5.1%) (4.3%)

(Source:Consultants Estimate for BIA Phase II Development)

The current feasibility study for the Phase II development to the BIA carried out by Japan Airports Consultants has revised the estimates using anew set of forecast models. The feasibility is in preparation stage and has yet to be published. The tentative estimates given in that report under preparation are given in Table 27. These estimates are significantly higher than the 1998 forecasts due to the GDP growth rate assumption of between 1.7% and 5.8% being revised upwards from 4.5% to 7.0%. The higher trends experienced in the 2003 to 2005 period have also influenced these revised estimates. Table 27: Total Passenger Demand (2006-2025) Actual Forecast Low Medium High 4,069,721 2004 4,728,699 4,755,357 4,761,939 2006 7.9% 8.1% 8.3% 5,102,266 5,140,541 5,178,840 2007 7.9% 8.1% 8.3% 5,505,345 5,556,925 5,608,684 2008 7.9% 8.1% 8.3% 5,940 ,267 6,007,036 6,074,205 2009 7.9% 8.1% 8.3% 2010 6,409,548 6,493,606 6,578,364 7.9% 8.1% 8.3% 2015 8,775,405 9,185,271 9,612,258 6.5% 7.2% 7.9% 2020 11,861,757 12,829,042 13,870,301 6.2% 6.9% 7.6% 2025 16,038,022 17,924,371 20,022,764 6.2% 6.9% 7.6% Source : Japan Airport Consultants

6.1.2 Cargo – Overall National

The movement of cargo over the last 15 years too has grown at 10.28% per annum as shown in Table 28. The growth pattern of the cargo movements appears slightly different to that of

51 the trend as for passenger traffic, except in the year 2001, when a large number of air carriers pulled out of BIA following the attack by terrorists.

The following combinations of explanatory variables have been used for forecasting in the Feasibility Study for the BIA Development Project - Phase II (SAPROF Team, OECF Team, November 1998). They have used combinations of variables such as: • Sri Lanka GDP • Foreign Countries GDP • Terrorism Index

The model with the best fit is given as follows:

1.442112 0.019790 -0.046059 Y = exp (-2.694157) * X 1 * X 2 * X 3

Where, Y is the total passengers for the year, X1 is the GDP of Sri Lanka in constant Rs million, X2 is the aggregated average growth rate weighed by foreign countries GDP (1985 = 1.0) and X3 is the Index of Terrorism, adjusted by the method of ‘centring repeated 3 term moving average’ Table 28: Historic Air Cargo at Bandaranaike International Airport (1990-2004)

Year Cargo (tons) Annual Growth 1990 39,830 - 1991 44,600 12.0% 1992 50,092 12.3% 1993 56,927 13.6% 1994 70,171 23.3% 1995 77,639 10.6% 1996 85,719 10.4% 1997 97,436 13.7% 1998 94,364 -3.2% 1999 103,865 10.1% 2000 128,312 23.5% 2001 101,547 -20.9% 2002 112,274 10.6% 2003 125,665 11.9% 2004 145,674 15.9% Average Growth p.a. 10.28%

(Source: Airports & Aviation Authority of Sri Lanka)

The final forecast results made in this study in 1998 are given in Table 29. However, when comparing the actual figures for the year 2003, it is observed that only the low projection is

52 reached. The primary reason for this has been the set back due to the terrorist attack on the BIA in the year 2000 and the subsequent pulling out of several carriers.

Accordingly the estimates made are given in Table 29. However, the actual figures for the year 2003 are much below even the low forecast. This too is attributed to the effect on flights after the attack in 2000. As shown in the table above, except for this year all other years have shown a steady growth averaging 10-12% p.a. This model also has been now revised in the Feasibility Study for Phase II by Japan Airport Consultants. The new forecasts are given in Table 30. Table 29: Forecast Results of Total Cargo Movements at BIA (2003-2013) 1997 2003 2008 2013 High 214,651 399,175 699,045 96,134 (14.3%) (13.2%) (11.9%) Medium 190,520 320,369 506,991 (12.1%) (11.0%) (9.6%) Low 159,675 232,212 320,207 (8.8%) (7.8%) (6.6%) (Source: Consultants Estimates, lopment, BIA DevPhase II) Table 30: Total Cargo Demand (2004 to 2025)

Actual Forecast Low Medium High 2004 145,674 2006 180,480 182,356 182,898 11.3% 11.6% 12.0% 200874 202,962 204,810 2007 11.3% 11.6% 12.0% 223572 226,506 229,240 2008 11.3% 11.6% 12.0% 248,836 252,780 256,583 2009 11.3% 11.6% 12.0% 2010 276,955 282,103 287,322 11.3% 11.6% 12.0% 2015 431,719 460,469 490,983 9.3% 10.3% 11.3% 2020 660,669 737,946 823,832 8.9% 9.9% 10.9% 2025 1,011,074 1,182,687 1,382,407 8.9% 9.9% 10.9%

(Source: Japan Airport Consultants)

6.1.3 General Observations

However, a quick investigation of the recent growth in air traffic particular with India shows that growth spurs can be induced by other parameters, such as deregulation and open skies policies, more so that economic growth and terrorism that are the two basic components of the above forecasting models. As such, regional cooperation and steps to increase more travel

53 within the SAARC region as elaborated in Section 5.1.3 would see a much greater growth rate. Moreover, other developments such a developing transit attraction are also factors that could change these predictions favourably.

6.2 Maritime

6.2.1 Overall Growth in Maritime Traffic

There are no empirical formulae or established rules to project overall growth in container traffic. Industry experts study the Economic Indicators of the respective countries in the region over a period of time to forecast economic growth and factor in any constraints applicable due to special considerations prevailing at that time. This is then translated into the growth in container traffic. In computing the container traffic, an optimistic, a pessimistic and a mid point figures are arrived at.

India is on an accelerated growth surpassing the predictions at a national level and is fast becoming a services hub for IT services etc. Foreign currency earnings from this sector and revenue growth contribute to the national budget. The central government has a number of development plans for implementation of their ports, in addition to the Sethu Samudram project. Sri Lanka could benefit from this development provided that it gears itself to be the Gateway to the Indian Subcontinent.

The Sethu Samudram Project is presently under design and planning stages and its final position is not known. However, initial inquiries reveal that its depth would not allow the navigation of large vessels and the status quo of the Port of Colombo with respect to the other ports in the region would be largely unaffected. An increase of feeder shipping could in fact strengthen the position of the Port of Colombo as a hub.

6.2.2 Growth in Container Sector

The two tables below show the projections of container traffic by the Consultants who have undertaken a study of the Port of Colombo. One is the domestic container traffic growth, whilst the other is the Colombo’s share of the ISC transhipment market. Table 31: Forecast of Domestic Container Traffic for Port of Colombo Year 2004 2005 2006 2007 2008 2009 2010 2015 2020

TEUs 661 727 792 864 941 1026 1,118 1,643 2,414 (000)

(Source: Sri Lanka Ports Authority)

54 Table 32: Forecast of Transhipment of Container Traffic to the Indian Sub Continent Year 2005 2006 2007 2008 2009 2010 2015 India Bangaladesh 6,658 7,390 8,203 9,106 10,107 11,219 17,263 Pakistan Transhipment % Via 39% 37% 35% 33% 34% 35% 33% Colombo Singapore Salalah etc .

TEUs ( 000) 2,597 2,734 2,871 3,005 3,436 3,927 5,696

(Source: Consultants Estimates)

6.3 Ferry Transport

No forecasts have been done. However, some projections could be based on the trends up to that year, suitably adjusted for capacity available in air travel. The success of a ferry service would be its ability to carry passengers at costs much lower than airlines and perhaps the possibility of carriage of personal vehicles.

55 7 NATIONAL DEVELOPMENT PRIORITIES AND SCHEDULING

7.1 Aviation

There has been discussion for a long period of time regarding the construction of a 2 nd international airport in Sri Lanka. Even though Chennai and Male are the nominated alternative airports for BIA, there is an ICAO requirement for a 2 nd international airport within the country. More importantly, every flight destined to the BIA has to carry fuel to reach either of these destinations in the event of an inability to use BIA. While a number of different locations have been studied over the years, the area identified for this purpose is in the southern part of Sri Lanka on the basis that it has a different weather pattern to that at the BIA. An initial location in Kuda Oya was investigated in 2004, but a new location further towards the coast in the vicinity of Weerawila is being also investigated at the present. This is expected to attract charter flights to begin with, as it is closer to the popular tourist areas in the south.

Preliminary estimates have forecasted that 5% of the total national passenger traffic could be diverted to a 2 nd airport within 15 years of commencement of operations. However, the on- going development of BIA to meet the entire national demand even up to 2025 may result in a delayed start to a 2 nd new international airport.

There are however different opinions in this regard. One point of view is that since a second airport will take a considerable time to develop in to commercial viability, BIA itself could be further developed with the addition of a second runway northwards of the existing runway or southwards into the land presently occupied by the industrial zone. This option would result in lower fuel carrying requirements as stipulated by ICAO for airports having more than one runway.

7.2 Maritime

Successive governments have expressed their desire to develop the Colombo port to be well ahead of other ports in the region to handle container traffic. Aggressive implementable development plans are necessary to meet the advancements in containerized cargo handling, coupled with three major challenges:

a) to address the capacity constraints;

b) the impact of the development of Mega-Carriers; and

c) to compete with the rapid development of the major Indian ports.

56 Feasibility studies, investigations and proposals have been considered from time to time in recent years. A Master Plan for development of all the Ports in Sri Lanka is also available with recommendations by a study team.

The Development Projects identified by the SLPA are as follows:

• Colombo South Port Development Facility Improvements of JCT; Extension of JCT4; JCT 1 & 2 deepening; Replacement and addition of container cranes; Enhancement of yard capacity; Improvement of Cross Berth North; Dredging of the basin to 15 meters; Upgrading of the main channel; Enhancement of JCT infrastructure; Superstructure to accommodate larger container vessels; and Terminal monitoring and control IT system. • Galle Harbour Development Harbour development; Yacht marina; Ship repair facilities; 2 Multi purpose berths; Outer breakwater 800m; Inner breakwater 350m; Berth for small craft 170m, 4.5m draft; Buildings and roads; and Cargo handling equipment; • Hambantota 6 Development of harbour; Feasibility study; Bunkering facilities; Power Generation Plant; and Ship repair facilities; • Oluvil Development of harbour; and 3m deep harbour for small craft

6 The development plan for Hambantota has been revised since time of initial writing of this report and is awaiting formal Government approval. The regional consultants working on Phase 2 of the SRMTS are requested to obtain the details from the Sri Lanka Ports Authority.

57 8m deep berth for general cargo Enhancement of existing facilities Lighthouse Maritime Training Centre • Point Pedro Improve existing facilities; and Passenger Landing Envisaged Improvements Port Complex & staff facilities Deepening Alongside Berth by 8m • Trincomalee Improve existing facilities Cement factory and terminal Ship repairs Conventional cargo terminal Flour mill and export facility Tanker terminal and storage facility Ferry terminal Fisheries harbour Future Developments Development of peninsula enveloping Marble Bay, Sweat Bay and Dead Mans Cove for the Tourism sector Development of stretch from Clapenberg to Yard Cove Development of land 500m in width adjacent to water’s edge for common user Port activities. Food – Prima flour facility Construction – Tokyo Cement Power Generation • Kankesanthurai Rehabilitation of KKS Breakwater (KKS is presently handling security cargo, repairs to be made to enhance security of vessels inside the Port)

The time line for development was to begin the studies and consultancy activities in 2004 and complete the identified projects by 2013. However, due to the current situation in the country with political changes at the highest level, other security considerations and lack of adequate funding there is distinct lack of progress and therefore timeframes are likely to be significantly extended.

58

APPENDIX A: DATA FOR AVIATION SECTOR SAARC REGIONAL OPERATIONS TO/FROM SRI LANKA

59 TABLE A1: PASSENGER FLIGHT FREQUENCY AND CAPACITY SAARC Origin Origin Destin. Destin. Carrier Flights Type Average Route (Airport) Airport (Airport) Airport (Airline per of Seat No Code Code Code) Week Aircraft Occupancy Level % IS101 Delhi DEL Colombo SO11 UL 7 + 7 A320 66.6% MS101 Male MLE Colombo SO11 UL 5 + 5 A340 52.1% MS101 Male MLE Colombo SO11 UL 10 + 10 A320 42% MS101 Dubai / Male DXB/MLE Colombo SO11 EK 6 A330 68.7% MS101 Narita / Male MLE Colombo SO11 UL 2 A340 66.5% MS101 London / Male MLE Colombo SO11 UL 2 A340 90.8% MS101 KL / Male MLE Colombo SO11 MAS 1 A330 46.1% IS102 Mumbai BOM Colombo SO11 UL 4 + 4 A320 65.2% IS102 Karachi / Mumbai KHI/BOM Colombo SO11 UL 3 + 3 A320 95.4% PS101 Karachi KHI Colombo SO11 PIA 2 + 2 B737 68.2% IS103 Tiruchchirapalli TRZ Colombo SO11 UL 10 + 10 A320 82.6% IS104 Trivandrum TRV Colombo SO11 UL 4 + 4 A340 63.7% IS104 Trivandrum TRV Colombo SO11 UL 2 + 2 A330 76.4% IS104 Trivandrum TRV Colombo SO11 UL 6 + 6 A320 59.6% IS105 Cochin COC Colombo SO11 UL 11 + 11 A320 71.9% IS106 Bangalore BLR Colombo SO11 UL 7 + 7 A320 85.8% IS107 Calicut CCT Colombo SO11 UL 9 + 9 A320 66.9% IS108 Chennai MAA Colombo SO11 UL 4 + 4 A340 76% IS108 Chennai MAA Colombo SO11 UL 6 + 6 A330 73.7% IS108 Chennai MAA Colombo SO11 UL 5 + 5 A320 83.5% IS108 Chennai MAA Colombo SO11 IC 7 + 7 A320 68.4% IS108 Chennai MAA Colombo SO11 JAI 7 + 7 B737 69.2% IS108 Chennai MAA Colombo SO11 SAH 7 + 7 B737 78.2% IS109 Hyderabad HYD Colombo SO11 UL 7 + 7 A320 63.2% MS101 Male MLE Colombo SO11 Euro Fly 1 A330 15.3% MS101 Male MLE Colombo SO11 EK 1 A330 59.9% MS101 Male / Dubai MLE/DXB Colombo SO11 EK 5 A330 61.7% MS101 Male / Vienna MLE/VIE Colombo SO11 Al 1 B763 40% MS101 Male / Düsseldorf MLE/DUS Colombo SO11 LTU 1 A330 25.1% MS101 Male / Munich MLE/MUC Colombo SO11 LTU 1 A330 22% MS101 Male / Frankfurt MLE/FRA Colombo SO11 LTU 1 A330 15.2% MS101 Male / Doha MLE/DOH Colombo SO11 QTR 1 A320 72.9%

Notes: 1. Source, Airport & Aviation Authority of Sri Lanka 2. Data given is for Scheduled flights for the week from 04 th July 2005 to 10 th July 2005. 3. The data does not include Charter Flights. 4. Average Seat Occupancy given is the mean for both directions. 5. Code of other country airports to be taken from National Report of respective countries.

60 TABLE A2(a): PASSENGER FLOWS (ARRIVALS IN SRI LANKA)

SAARC Origin Origin Destin. Destin. Carrier No of Arriving Passengers per year Route Airport Airport Airport Airport (Airline Code) 2000 2001 2002 2003 2004 Code Code IS101 Delhi SO11 Colombo UL 25,785 23,064 28,031 35,101 41,669 IS102 Chennai SO11 Colombo UL/JAI/SAH/IC 160,790 158,425 168,488 180,091 234,266 IS103 Bombay SO11 Colombo UL 15,404 14,276 20,627 27,093 39,494 IS104 Trivandrum SO11 Colombo UL 39,921 50,676 47,819 45,541 51,265 IS105 Tiruchchirapalli SO11 Colombo UL 22,381 19,262 27,010 33,468 40,068 IS106 Bangalore SO11 Colombo UL - - 8,943 23,555 45,623 IS107 Buddagaya SO11 Colombo UL - - - 334 1,659 IS108 Cochin SO11 Colombo UL - - - 9,796 22,691 IS109 Calicut SO11 Colombo UL - - - - 10,125 IS110 Hyderabad SO11 Colombo UL - - - - 13,506 PS101 Karachi SO11 Colombo PIA/UL 23,525 15,680 n/a 7,859 18,694 MS101 Male SO11 Colombo UL/EK/LTU/QTR 111,139 99,947 76,659 106,189 128,461 Notes: 1. Source: Civil Aviation Authority, Colombo, Sri Lanka. 2. The data does not include passengers on Charter Flights. 3. Code of other country airports to be taken from National Report of respective countries.

61

TABLE A2(d): PASSENGER FLOWS (DEPARTURES FROM SRI LANKA)

SAARC Origin Origin Destin. Destin. Carrier No of Departing Passengers per year Route Airport Airport Airport Airport (Airline Code) 2000 2001 2002 2003 2004 Code Code IS101 SO11 Colombo Delhi UL 25,611 21,160 27,933 33,269 39,751 IS102 SO11 Colombo Chennai UL/JAI/SAH/IC 171,000 159,833 170,886 174,478 224,056 IS103 SO11 Colombo Mumbai UL 16,055 14,530 20,638 26,382 35,933 IS104 SO11 Colombo Trivandrum UL 56,279 50,376 45,830 47,277 56,409 IS105 SO11 Colombo Tiruchchirapalli UL 23,782 21,807 28,543 35,106 44,357 IS106 SO11 Colombo Bangalore UL 8,865 23,752 46,739 IS107 SO11 Colombo Buddagaya UL 1,346 3,104 IS108 SO11 Colombo Cochin UL 10,912 26,524 IS109 SO11 Colombo Calicut UL 12,013 IS110 SO11 Colombo Hyderabad UL 12,524 PS101 SO11 Colombo Karachi PIA/UL 19,784 15,109 n/a 7,752 17,952 MS101 SO11 Colombo Male UL/EK/LTU/QTR 114,222 101,640 84,121 111,382 130,535 Notes: 1. Source: Civil Aviation Authority, Colombo, Sri Lanka. 2. The data does not include passengers on Charter Flights. 3. Code of other country airports to be taken from National Report of respective countries.

62 TABLE A3 (a): CARGO FLOWS (ARRIVING IN SRI LANKA) SAARC Origin Origin Destin. Destin. Carrier Freight Tonnes Arriving per year Route Airport Airport Airport Airport (Airline Code) 2000 2001 2002 2003 2004 Code Code IS101 Delhi SO11 Colombo UL 741 594 685 614 1,023 IS102 Chennai SO11 Colombo UL/JAI/SAH/IC 3,067 2,147 2,324 2,464 2,656 IS103 Mumbai SO11 Colombo UL 259 346 453 555 1,007 IS104 Trivandrum SO11 Colombo UL 919 1,466 1,141 849 1,131 IS105 Tiruchchirapalli SO11 Colombo UL 0 0 0 0 1 IS106 Bangalore SO11 Colombo UL 208 256 160 IS107 Buddagaya SO11 Colombo UL 0 0 IS108 Cochin SO11 Colombo UL 80 288 IS109 Calicut SO11 Colombo UL 138 IS110 Hyderabad SO11 Colombo UL 182 PS101 Karachi SO11 Colombo PIA/UL 342 238 0 237 464 MS101 Male SO11 Colombo UL/EK/LTU/QTR 3,328 1,601 1,477 2,555 2,350

Notes: 1. Source: Civil Aviation Authority, Colombo, Sri Lanka. 2. The data does not include freight carried on Charter Flights. 3. Code of other country airports to be taken from National Report of respective countries.

63 TABLE A3 (d): CARGO FLOWS (DEPARTING FROM SRI LANKA) SAARC Origin Origin Destin. Destin. Carrier No of Departing Passengers per year Route Airport Airport Airport Airport (Airline Code) 2000 2001 2002 2003 2004 Code Code IS101 SO11 Colombo Delhi UL 124 143 215 119 282 IS102 SO11 Colombo Chennai UL/JAI/SAH/IC 2,600 n/a 2,879 3,064 3,577 IS103 SO11 Colombo Bombay UL 48 77 77 94 216 IS104 SO11 Colombo Trivandrum UL 283 472 581 470 1,158 IS105 SO11 Colombo Tiruchchirapalli UL 78 52 55 48 37 IS106 SO11 Colombo Bangalore UL 321 399 IS107 SO11 Colombo Buddagaya UL 0 IS108 SO11 Colombo Cochin UL 36 60 IS109 SO11 Colombo Calicut UL 21 IS110 SO11 Colombo Hyderabad UL 76 PS101 SO11 Colombo Karachi PIA/UL 2,610 1,024 631 1,452 1,935 MS101 SO11 Colombo Male UL/EK/LTU/QTR 9,235 6,232 2,872 5,360 6,625

Notes: 1. Source: Civil Aviation Authority, Colombo, Sri Lanka. 2. The data does not include freight carried on Charter Flights. 3. Code of other country airports to be taken from National Report of respective countries.

64 TABLE A4: PASSENGER RATE DATA

SAARC Origin Origin Destin. Destin. Distance Standard Standard Route Airport Airport Airport (kms) Economy Business Code Code Ticket Return Ticket Return ($) ($) SI101 S101 Colombo DEL Delhi 2,444 394 995 SI102 S101 Colombo MAA Chennai 668 151 301 SI103 S101 Colombo BOM Mumbai 1,530 310 641 SI104 S101 Colombo TRV Trivandrum 360 126 202 SI105 S101 Colombo TRZ Tiruchchirapalli 440 139 221 SI106 S101 Colombo BLR Bangalore 806 174 394 SI107 S101 Colombo GAY Buddagaya SI108 S101 Colombo COK Cochin 502 156 297 SI109 S101 Colombo CCJ Calicut 630 312 473 SI110 S101 Colombo HYD Hyderabad 1,160 228 493 SP101 S101 Colombo KHI Karachi 2,403 240 577 SM101 S101 Colombo MLE Male 829 174 221

Notes: 1. Source: Travel Agents, Colombo, Sri Lanka. 2. Fare is as at 10 th October 2004 of direct flight operated by UL. 3. Code of other country airports to be taken from National Report of respective countries. 4. There are no flights to GAY operating at time of inquiry

65 Table A5: Cargo Rate Data on scheduled passenger aircraft

SAARC Origin Origin Destin. Airport Destin. Freight Minimum Rate for 100 kgs Excess Baggage charge Route Airport Code Code Airport $ ($ per kg) ($ per kg) SI101 S101 Colombo DEL Delhi 12.44 1.07 5.20 SI102 S101 Colombo MAA Chennai 12.44 0.36 1.67 SI103 S101 Colombo BOM Mumbai 12.44 0.74 3.34 SI104 S101 Colombo TRV Trivandrum 12.44 0.28 1.07 SI105 S101 Colombo TRZ Tiruchchirapalli 12.44 0.31 1.17 SI106 S101 Colombo BLR Bangalore 12.44 0.56 2.16 SI107 S101 Colombo GAY Buddagaya 7.50 ** 5.20 SI108 S101 Colombo COK Cochin 12.44 0.48 1.57 SI109 S101 Colombo CCJ Calicut 12.44 0.37 2.55 SI110 S101 Colombo HYD Hyderabad 12.44 0.55 2.74 SP101 S101 Colombo KHI Karachi 12.44 1.02 3.63 SM101 S101 Colombo MLE Male 12.08 0.44 1.47

Notes: 1. Source, Sri Lankan Airlines 2. All cargo rates are excluding fuel and security surcharge. 3. Fuel & security surcharge will not apply for minimum freight 4. As the rate is not published to GAY, the cost from DEL/GAY will be added.

66 TABLE A6: PASSENGER DATA AT INTERNATIONAL AIRPORTS

Airport Code Airport No of Annual international Capacity of Passenger each No of international passengers per year Terminals Terminal 2000 2001 2002 2003 2004 Passengers per year S101 Colombo CMB 01 6 Million Inwards 1,422,348 1,279,429 1,364,809 1,602,470 2,018,742 Outwards 1,458,039 1,348,614 1,401,355 1,630,292 2,050,979 Transit 342,540 239,661 260,941 334,013 607,225

Notes: 1. Source: Airports Authority of Sri Lanka.

TABLE A7: CARGO DATA AT INTERNATIONAL AIRPORTS

Airport Airport No of International Cargo Capacity of Sq meters Tonnage Throughput per year Code Terminals each of each 2000 2001 2002 2003 2004 Terminal cargo terminal building S101 Colombo UL Terminal 1 12,610 Loaded Loaded Loaded Loaded Loaded CMB UL Terminal 2 10,800 78,300 62,102 70,150 76,540 93,145 Cargo Village Terminal 1 5,700 Unloaded Unloaded Unloaded Unloaded Unloaded Cargo Village Terminal 2 250,000 2,817 50,012 39,445 42,124 49,125 52,529 Cargo Village Terminal 3 5,100 Export Terminal 2,040 Total Total Total Total Total 128,312 101,547 112,274 125,665 145,674

Notes: 1. Source: Airports Authority of Sri Lanka.

67 TABLE A8: RUNWAY CAPACITY DATA OF INTERNATIONAL AIRPORTS

Airport Airport No and size of Category Landings and Landings and Takeoffs per annum Code Active of takeoffs in peak (including domestic) Runways Runway hour per Nos/metres I/II/III runway 2000 2001 2002 2003 2004 S101 Colombo 01 / 3350 m I Landings 12 32,123 26,363 25,276 27,937 35,161 CMB Take Offs 13

Notes: 1. Source: Airports Authority of Sri Lanka.

68 TABLE A9: PASSENGER TRAFFIC QUALITATIVE DATA FEEDBACK Question Report 1. What is the projected annual growth in passengers through all 7.9% - low case, 8.1% - medium case, national airports up to 2010? 8.3% - High case 2. Are such growth forecasts available on an airport by airport Low case = 6,410,000 ; Medium case = 6,494,000; basis? If so what are the forecasts for each of the study airports High Case = 6,578,000 3. Do you expect an increase in intra-regional services and if so Yes. from where to where? India, Pakistan & Dacca 4. What is the main focus of air services and airport strategy/policy Airport – Provide adequate capacity to international standards and enhance safety and security of airport operations. up to 2010? 5. What additional intra-regional routes do you intend to open or Dhaka -2008 increase the frequency of existing flights and when? Kolkota – 2008 Karachi 2007 Ahmedabad – 2007 Trichy 2006 6. Which intra-regional routes are reaching capacity levels? Will • Delhi, Mumbai, Bangalore, Chennai, Karachi you increase the size of the plane or flight frequency • All Indian cities need to be served by bigger aircraft to increase capacity. • Preference for Karachi would be to increase frequency through negotiations with Pakistani Government 7. What are the major causes of intra-regional flight delays? • Internal Security, Immigration, baggage delivery, lLack of terminal space during peak times 8. Are there regular operational problems with the intra-regional • No capacity problems with regard to flight corridors and runway slots. flights – availability of flight corridors, runway slots, or terminal • Governments should be encouraged to increase investment in Airport terminal space. gates in peak hours? What is the proposed solution? • Internal security procedures should be streamlined and unnecessary procedures eliminated. 9. What are the plans for airport/terminal development to 2010? • The capacity constraints with regard to terminal gates during peak hours will not be present after November 2005. • Terminal development for a capacity of 6 million passenger movements per annum is scheduled for completion by October 2006. The elements of the project other than the public concourses and expansion of the check-in area has been completed. 10. What is the average inward and outward processing time for • Within 40-45 minutes for inwards and outwards passengers. inward intra-regional passengers? What is the main cause of • Immigration, lack of terminal space for check-in counters and departure gates, inadequate number of baggage delivery delays, immigration/customs/other? belts. • The number of airline check-in counters will be increased by 35% and the project in progress is scheduled for completion by October 2006. 11. Is the security screening capacity compatible with demand? • Airport-Yes • Airlines –No 12. What are the major complaints in relation to intra-regional • Increased reporting time. services? • Pilferage of baggage. • Lack of customer service on board. • Fewer frequencies between destinations. • Inconvenient departure/arrival times. Notes: 1. Sources: Professionals in the Aviation Sector.

69 TABLE A10: CARGO TRAFFIC QUALITATIVE DATA FEEDBACK

Question Report 1) Are the international cargo terminals sufficient for future demand? Short Term – Yes Medium to Long Term - No. 2) Is there a program to increase cargo facilities? • Yes. Sri Lankan is planning to add additional terminal capacity in Katunayake. 3) Is there sufficient underbelly space to meet cargo demands? • It is just adequate. But increase competition could improve competitive pricing for cargo space. 4) Are there any in tra -regional freighter services, excluding express carriers? • Yes. All are operated by Sri Lankan Airlines. If so what is the frequency and where to they come from or go? • Frequencies per week: Chennai x2, Trivandrum x1, Coimbatore x 1, Bangalore x 1, Delhi x 1 5) What is the average import dwell time in the international cargo terminal? • Maximum 24 hours (1 day) on a normal situation subject to formalities. (days) 6) Where is there a shortage of capacity for movement of air cargo intra - • To/From Indian airports regionally? 7) What are the main cargo constraints in relation to intra-regional traffic • Pricing perceived at being too high 8) What are the current levels of custom examination (% of consignments • No Green Channel system. Consignments inspected randomly examined)? Is there a green channel system for freight in operation? 9) What is the major problem with the international air cargo terminals • The Sri Lankan Cargo terminal has the required equipment/skills and staff to mange the Hub operations efficiently. Expansion is planned in 2006. Protecting from rain during transportation to/from aircrafts is a challenge. Measures as polythene covers/covered trolleys are measures currently in place.

Notes: 1. Sources: Professionals in the Aviation Sector.

70 APPENDIX B: DATA FOR MARITIME SECTOR SAARC REGIONAL OPERATIONS TO/FROM SRI LANKA

71 CONTAINER SERVICES (Intra-regional services or linkages only)

TABLE C1: SERVICE AND CAPACITY ON OFFER SAARC Origin Destination Carrie rs Distance Service TEU Route 7 Nautical Frequency capacity Miles per month on offer (both per directions) sailing Colombo Chennai BTL, OEL, XCL, Far 590 Shipping, Ocean 18 600 Lanka Colombo Chittagong XCL, HRC, 1340 8 600 Colombo Cochin BTL, OEL, XCL, Far 307 Shipping 8 900 Colombo Haldia BTL, XCL, Far Shipping 8 800 Colombo Kandla XCL, OSS, ACL 8 650 Colombo Karachi XCL, ACL, OSS 1341 8 900 Colombo Kolkota XCL, BTL, Far 1244 Shipping 8 800 Colombo Male MNSL, Lily 8 200 Colombo Mongla NIL NIL NIL Colombo Mumbai ACL 889 4 900 Colombo Port Quasim NIL NIL NIL Colombo Tuticorin XCL, BTL, OEL, Far Shipping, IPS, ACL, 24 500 SIMATECH Colombo Vishakapatnam Far Shipping 866 4 500

Notes 1. There are several carriers too numerous to list. 2. The service frequency and capacity varies and was not available for verification

72 TABLE C2(E): TRAFFIC VOLUMES: IMPORT

SAARC Origin Destination TEU per annum Route 2000 2001 2002 2003 2004 CHITTAGONG COLOMBO 451 1227 741 1062 774 MONGLA COLOMBO 1 0 2 0 0 MUMBAI COLOMBO 9174 4228 2306 1911 1915 KOLKOTA COLOMBO 1670 981 894 879 1164 CHENNAI COLOMBO 7600 7200 9151 10773 16348 COCHIN COLOMBO 890 1246 104 1501 1509 GOA (MARMAGOA) COLOMBO 56 103 343 HALDIA COLOMBO 1686 1425 1741 2384 2681 KANDLA COLOMBO 1599 1402 1712 2556 4003 MANGALORE COLOMBO 1 8 6 26 176 MUNDRA COLOMBO 329 NHAVA SHEVA COLOMBO 15195 17852 23532 30457 33751 TUTICORIN COLOMBO 6693 10094 9829 8595 11603 VISAKHAPATNAM COLOMBO 2 0 36 64 3 PIPAVAV COLOMBO 3 46 0 3 MALE COLOMBO 1542 1768 1614 1180 1741 KARACHI COLOMBO 13243 11653 9593 10297 12817 MUHAMED BIN COLOMBO 371 QASIM

73 TABLE C2(I): TRAFFIC VOLUMES: EXPORT SAARC Origin Destination TEU per annum Route 2000 2001 2002 2003 2004 COLOMBO CHITTAGONG 3181 3194 3021 1992 5607 COLOMBO MONGLA 55 0 0 0 0 COLOMBO MUMBAI 4043 2687 1462 1698 1176 COLOMBO KOLK OTA 2633 3502 3253 4859 4074 COLOMBO CHENNAI 8500 6866 12296 12971 12957 COLOMBO COCHIN 7795 7556 8958 6915 7501 COLOMBO GOA (MARMAGOA) 74 43 44 490 603 COLOMBO HALDIA 65 1286 906 1400 1055 COLOMBO KANDLA 285 1256 869 1134 832 COLOMBO MANGALORE 147 506 758 748 484 COLOMBO MUNDRA 264 COLOMBO NHAVA SHEVA 3139 6154 14282 16061 13556 COLOMBO TUTICORIN 11876 16671 17238 15313 20489 COLOMBO VISAKHAPATNAM 0 COLOMBO PIPAVAV 0 253 0 0 0 COLOMBO PARADIP 130 694 COLOMBO MALE 939 981 1224 1222 1544 COLOMBO KARACHI 6099 5289 4951 5165 5054 COLOMBO PORT QUASIM 0 1 0 2 12

74 Table C3: Traffic Balance

SAARC Origin Destination Intra-regional Empty TEU shipped per annum Route 2000 2001 2002 2003 2004

Notes 1. This information is not available

Table C4: Rates in US$

SAARC Origin Destination Average Sea Average Sea Average Average Routes freight per freight per40 ft FOB FOB 20ft FCL FCL charges charges US$ US$ per20ft per40ft FCL FCL Colombo Chennai 150 325 Colombo Chittagong 400 700 Colombo Cochin 150 350 Colombo Haldia 450 750 Colombo Kandla 350 550 Colombo Karachi 475 950 Colombo Kolkata 300 450 Colombo Male 800 1450 Colombo Mongla Colombo Mumbai 300 500 Colombo Port Qasim 475 950 Colombo Tuticorin 90 200 Colombo Vishkapatnam 400 600 Colombo Nava Sheva 300 500

Notes: 1. The actual charges vary based on volumes of cargo, discounts being offered by freight forwarding companies . 2. Above rates include Colombo THR 3. Rates are quoted values for export cargo on CY/CY basis

75 PORT DATA

CONTAINER TERMINALS

TABLE C5: TRAFFIC LEVELS

Name of Port TEU TEUs handled per annum Terminal capacity per terminal 2000 2001 2002 2003 2004 JCT Colombo 45,668 1,416,356 1,380,230 1,203,192 1,329,800 1,302,374 SAGT Colombo n/a 300,591 329,659 558,000 624,436 899,680 UCT Colombo 8,000 10,625 7,412 24 115 14,182 Other Colombo Nil 5,283 9,304 3,478 4,985 4,289 Quays Galle Nil Trincomalee Nil

Notes: 1. JCT- Jaya Container Terminal 2. SAGT South Asia Gateway Terminal 3. UCT – Unity Container Terminal 4. Annual Capacity is not computed. Given above is the capacity in TEUs.

76 TABLE C6: PERFORMANCE AND EQUIPMENT

Name of Port Average Average Ground No of No of reachstackers/ Terminal import export storage Container straddlecarriers/ heavy container container slots/Height cranes & fork trucks etc. (itemize dwell dwell of gantries each) time time stacks/TEU (days) (days) capacity JCT Colombo n/a n/a 45,668 14 39 Nos. RTGs 4 Nos. RMGs SAGT Colombo n/a n/a n/a 09 28 Nos. RTGs 1 Nos. Mobile 4 Nos. Reach stackers 9 Nos. Fork lifters 50 Nos. Prime Movers UCT Colombo n/a n/a 8,000 03 8 Nos. RTGs 50 Nos..Prime Movers; Galle - - - - No facilities for Trincomallee - - - - containerized cargo Other Colombo - - - operations Quays

Notes: 1. The container dwell time is not computed and published. 2. The storage heights are not available

TABLE C7: CONNECTIVITY AND SERVICES

Name of Terminal Location Rail Connected Y/N Organizations present on terminal QEQ Colombo Y Customs, SAGT Colombo N SLPA, JCT Colombo Y Sri Lanka Navy Galle Y Trincomallee Y

Note: 1. Railway lines are available from within the port to Inland, they are not fit for use. While Galle and Trincomalee Ports have railway operations, Colombo has ceased for considerable time

77 TABLE C8: CONTAINER SHIPPING QUALITATIVE FEEDBACK

Question Report 1) What are your growth projections up Average would be around 10% to 2010 on your intra-regional routes? 13% growth in 2003-2004 2) What is the % split between 20ft and Imports are in 20s(70% in 20s) 40 ft containers for intra-regional Exports are in 40s (60% in 40s) trade? Is it changing? So an imbalance is caused 3) Do you regularly move empty Yes. There is a need for greater empty containers in the region. containers intra-regionally? Why? Because of the size imbalance, there is a flow of empty containers between SAARC countries. 4) What % of containers are cleared at For imports, 70% of removals of FCLs are sent direct to consignee the container terminal? stores and LCLs are destuffed 100%. For exports, all are considered FCLs by the port, some consolidation takes place by shipping agents. 5) What % of containers are transferred 90% of clearance of FCLs from Port to CFSs to a Container Freight Station for clearance? 6) What % of intra -regional containers NONE is sent to ICD for clearance? 7) What changes in your intra-regional Colombo Port to become the Gateway of the Indian sub-continent. services do you expect before 2010? Need to be a Mega Hub-port. Colombo South Harbour Project implementation will increase in handling capacity. 8) What are the main port constraints? Cranes can work only 18 containers across; larger vessels are with 22 containers across. Limitation of the small basin. Inadequate depth. Ultra Post Panamax (5 th generation vessels) can not be accommodated without the Colombo South Harbour Project. 9) What are the main container Same as above. Capacity needs to be improved by 2008. More of terminal constraints? larger vessels with bigger lengths and draft have to be served. 10) What are the main inland Serious traffic congestion on the Roads. Most Roads are not designed distribution constraints? for container traffic. 11) What are the main institutional Major Policy reforms are necessary. Ineffective Leadership and drive constraints? resulting in lack of consistency, Frequent changes of management due to Government changes resulting in no continuity of policy or its implementation. 12) What are the berth occupancy 75% - 80% levels at the container berths? 13) What is the quayside container 20 – 25 moves per hour crane performance per hour? 14) What is the average berthing time Waiting time is zero. About one hour for berthing from arrival time per vessel?

78 TABLE C9: QUALITATIVE FEEDBACK ON PORTS

Question Probable Sources Report 1) What are the port/container Port or Container An average of 10%. terminal growth projections up to Terminal Operator 2010? 2) What major terminal/equipment Port or Container Dredging of JCT1 and JCT2 by 3m. Extension of developments are projected before Terminal Operator JCT4. New cranes to replace old ones and new 2010? cranes to handle 22 across. 3) Are the port/terminal and Port or Container NO. However plans are in place. Major delays Customs IT systems linked? Is Terminal Operator from the conception stage to implementation. there a “community” system in place?

4) What are the main port/terminal Port or Container Capacity constraints, Limitation in Basin size. Can constraints? Terminal Operator not handle large vessels. 5) Are the container terminal Port or Container From 2001 onwards has been decreasing dwell times increasing or Terminal Operator decreasing? 6) Are the CFS dwell times Port or Container Decreasing increasing or decreasing? Terminal Operator 7) What are the main causes of the Port or Container In general, the Importers are not ready with the delays that result in these dwell Terminal Operator right documentation for clearance and fees etc. times? 8) Is intra -regional traffic dealt Port or Container NO with differently from inter- Terminal Operator regional traffic? 9) Do you expect the % of Port or Container Potential exists, however the Rail service is not containers being Terminal Operator developed to handle container traffic. Existing distributed/collected by rail to Railway track needs investment for straightening increase or decrease? curves, cranes etc. 10) What are the major Port or Container Major operational constr aints are given above. operational constraints and how Terminal Operator SLPA is lone port and needs to link with Multi Port can these be resolved? Service delivery capability. Speedy implementation of the Colombo South Harbour Project is a necessity. The need to become a Mega hub port thus the Gateway to the ISC.

79