Sri Lanka’s post COVID external reserves fell to their lowest level of $ 4 billion in March 2021 from a high of $ 8 billion in December 2019, the exchange rate of the US dollar fell from Rs. 180 to Rs. 200, our debt service requirements for 2021 exceed $ 6 billion, the recent 60% rise in crude oil import prices and the push to ease import restrictions that now hamper the economy, require immediate thinking and action to improve our exchange rate. Earnings (FEE).

Sri Lanka has been an island with biodiversity and a large rural farming community for generations, with limited land and forest cover, and a rapid explosion of needed development may come from our sea around.

What are our strengths in the Sri Lankan Sea?

1. Sri Lanka (SL) has a territorial sea of ​​21,500 km2 and an exclusive economic zone (EEZ) extending up to 200 nautical miles (370 km) from the coastline over an area of ​​517,000 km2. Our Sri Lanka Sea (SOS) is eight times the size of the land mass of 65,000 km2; Sri Lanka has rights to the water column, seabed and subsoil resources of the EEZ.

2. SL, an island separated from the Indian subcontinent by the narrow Palk Strait has a 1,340 km coastline characterized by a series of picturesque sandy bays, and sand dunes, spiers, rocky headlands and cliffs. sandy beaches, lagoons, mangroves and estuaries, providing a sanctuary for our biodiversity habitat. SL also has a ring of fishing harbors and colonial forts around it.

3. Global trade is transported by 35,000 freighters, 5,000 tankers and 45,000 planes ply our EEZ each year using it as the main east-west sea route (EWSL), at their will and convenience, without levy for such a passage.

4. The Colombo Port (POC) at the center of the world’s busiest EWSL has now become the Central Port (CHP), on both sides of Suez and Singapore, largely serving the growth of India, Pakistan, Bangladesh and the Maldives. , Myanmar, Indonesia, Africa, Australia, etc.

5. The 270 hectares recently reclaimed from SOS are home to the new port city of Colombo, comprising world-class real estate development, a global financial center and a service center.

6. The newly constructed Port of Hambantota (POH) close to natural sea depths over 30 meters south of SL is 10 miles from the EWSL.

7. The Port of Trincomalee (POT) east of SL has the largest and deepest natural port in the world, which was used during the first oil crisis in the early 1970s to immobilize half of the tankers. of the world. POT has a fleet of fuel tanks comprising 100 UK built tanks.

8. The Sri Lanka Sea has proven oil reserves in the Mannar, Cauvery and Southern Basins estimated to be sufficient to supply SL for 60 years.

9. The continental shelf surrounding Sri Lanka extends from the present coastline to a bathymetric line of 150 m. This corresponds to the lowered paleo of sea level during the last glacial maximum. This submerged surface can be identified as the “first planted surface” (Katupotha, 2013). Within the continental shelf under deliberation, Sri Lanka, on the basis of an agreed declaration of understanding, is entitled to a large area of ​​its seabed in the southern part of the Bay of Bengal. With the silt deposits of the Ganges over the centuries, this area is considered rich in hydrocarbons and other resources. There is great potential here for SL to benefit from the extraction and processing of rich minerals through joint ventures providing technical know-how.

New Sri Lanka Sea Foreign Exchange Income

1. The Port of Colombo handled seven million TEU (mEVP) in 2020 and there is potential to rapidly increase the capacity of the central port to 15 mTEU by 2023, 27 mTEU by 2025, 40 mTEU of here 2029, from the POC by the acceleration of development plans, and the commissioning of a New Port of Negombo (PON) 20 miles from POC, and functioning in unison as COLOMBO PORT SYSTEM (CPS) increasing the capacity to 60 mTEU in the long term, subject to detailed technical and financial feasibility, while preserving the biodiversity habitat therein.

2. At present, the ports of Shanghai and Singapore are at the first and second in the world ranking, with +40 mTEU, and Colombo is ideally placed to serve and support the huge Indians, Pakistanis, Bangladesh, Indonesia (having together a population of two billion) new engines of manufacturing and containerization. As now demonstrated, POC can and will attract neighborhood transshipment goods offering continued capacity growth and superior service at the lowest cost. Maintaining the above competitive attributes of POC on Indian ports will allow POC growth to keep pace with increased capacity, rather than the other way around; it is our main inherent strength.

3. The estimated revenues of POC in billions of dollars and the throughput in mEVP are shown in Table 1. The breakwater of the southern port extension will cost 0.6 billion dollars in 2022 and the new breakwater and northern port infrastructure, etc. is estimated at $ 0.9. billion dollars in 2026, which could be financed by ADB, JICA, etc. investors on a build, operate and transfer (BOT) basis. Terminals managed by PPPs bringing together large shipowners will fill the capacity growth of the POC. New PPPs can be structured on the same basis as the South Asia Gateway Terminal (SAGT) model which has now been operating successfully for over 20 years. The $ 1.5 billion investment in the breakwaters of the South Port Extension and New North Port has a potential return on investment (ROI) of 100% on foreign exchange earnings.

4. Foreign direct investment (FDI) in the construction of the port city of Colombo is estimated to exceed $ 1 billion in 2021. In addition, the inflow to SL from the port city is estimated to exceed $ 2 billion d ‘by 2024 and $ 3 billion by 2025. Total investment $ 15 billion by 2040.

5. It is estimated that the Port of Hambantota and the adjacent massive hinterland proposed for industrial, warehousing and service activities could generate additional costs of $ 1 billion by 2022, $ 1.5 billion. by 2023 and 2 billion by 2024 thanks to FDI and their operations.

6. The Port of Trincomalee has great potential to attract FDI / revenues exceeding $ 1 billion per year by 2022 through leasing of fuel tanks and other maritime activities.

7. Commercial exploitation of oil from Mannar Basin and Cauvery Basin, etc .; has the potential to supply SL with crude oil on which we spend $ 4 billion per year.

8. The expansion of maritime security and service activity in the EEZ has the potential to generate more than $ 1 billion per year.

9. Set up joint ventures to exploit the resources of our EEZ, deep sea fishing, ocean wave energy, seabed minerals, etc. – potential profit of $ 1 billion per year.

10. There is also great potential to add to the post-COVID tourism activities of our biodiversity rich coastline, which could further improve FEE in Sri Lanka.

$ 60 billion SL external debt swap / cancellation

Foreign carriers of 35,000 freighters, 5,000 tankers and 45,000 airplanes USE / pass through our EEZ every year, dumping their pollution on Sri Lanka. The use of Sri Lankan domestic carriers in spaces of other countries is tiny (0.1%) compared to how foreign carriers use our area. Busy EWSL ships and tankers sail past Hambantota, eight miles from SL, thus saving navigation time to their advantage, while leaving the pollution the ships create on the sea and coasts of SL.

The passing foreign planes cause the same damage to SL. It is estimated that foreign countries benefit to the tune of $ 10 billion per year while releasing 10 million tonnes of CO2 emissions on Sri Lanka each year, continually damaging our resources (estimated values ​​are subject to further scrutiny ), directly and indirectly from climate change. The damage to our economy from drought, floods, crop failures, landslides, conflicts with human elephants, urban migration and damage to the biodiversity of SL has been estimated to be around 6-8%. of GDP per year.

The SL government must solicit foreign countries, WTO, World Bank, UN and IMO to swap / cancel our $ 60 billion foreign debt for damage to our resources.

Continental Shelf: The resources of the continental shelf could provide SL additional income overseas through appropriate long-term overseas collaborations.

We can bounce back – move on

The post-COVID devastation, and coupled with the current situation in SL largely caused by climate change with regard to the human-elephant conflict, drinking water, protection of biodiversity, water for agriculture traditional, safeguarding forest cover, tropical forests, etc. protests against the further commercialization of limited land resources.

The way forward is to use the Sri Lankan Sea.

[The writer, FCMA (UK), FCCA, ACC.Dir.SL, CGMA, JP, is an Independent Financial Advisor and a Consultant and the former Chairman of the Sri Lanka Ports Authority and Ceylon Shipping Corporation, Head of Finance/Planning Zambia Consolidated Copper Mines – a NYSE Listed Company and George Steurts, and an Accredited Director of Sri Lanka, an Independent PLC Director. He enjoys playing badminton, golf, walking and cutting lawns at his green residence. He published ‘A Rolling Budget & Five Year Plan to Turn Around the Post-COVID19 Economy of Sri Lanka’ under ISBN 978-624-96562-0-8 on 31 July 2020 and is contactable on [email protected]]