Wednesday, 07 December 2022
ADB, Sumitomo Mitsui back Colombo port expansion

ADB, Sumitomo Mitsui back Colombo port expansion

The Asian Development Bank (ADB) and Japan's Sumitomo Mitsui Banking Corp. (SMBC) are advising the Sri Lankan government on a $500- million port expansion project in Colombo.

The half-billion-dollar contract covers expansion of the East Container Terminal in Colombo Port to a 1,200-meter berth from the existing 440 meters.

In February, the Sri Lanka Port Authority appointed ADB as its transaction adviser, and ADB then picked SMBC as its co-advisor. The linkup with SMBC is ADB's first public-private partnership (PPP) offering co-advisory services for the project's preparation, structuring, and execution.

The pre-bidding process began on June 5, and interested parties have until July 21 to submit documents. After construction, the winning bidder will run and maintain the port for 35 years.

SMBC is one of eight partner-lenders for ADB's PPP co-advisory program. The others are Australia's Macquarie Capital; Japan's Bank of Tokyo-Mitsubishi UFJ, and Mizuho Bank; France's BNP Paribas, Credit Agricole CIB, and Societe Generale; and the U.K.'s HSBC.

The PPP approach recognizes that ADB on its own cannot hope to bankroll the region's $8 trillion infrastructure requirement for the decade ending in 2020. President Takehiko Nakao has therefore tapped other sources of funds, which the bank can channel into regional infrastructure development.

ADB set up an office dedicated to the PPP advisory in 2014. The bank last year also agreed to jointly fund projects with the Asian Infrastructure Investment Bank (AIIB), even though many believed AIIB was set up by China to compete with ADB. On June 11, ADB and AIIB agreed to both contribute $100 million to build a major highway in Pakistan.

Under Nakao, ADB's two lending windows -- the Asian Development Fund and the Ordinary Capital Resources -- have been merged in order to increase annual lending capacity by up to 50% from the beginning of 2017.

(Cliff Venzon - asia.nikkei.com)

Last modified on Friday, 01 July 2016 11:33