The construction of the new terminal on the expanded Port of Colombo appears to have run into a problem due to the low rates of royalty offered by the sole bidder, Aitken Spence and China Merchant Holdings, shipping sources said.

It is expected that the Cabinet Appointed Negotiating Committee (CANC), will meet shortly to prepare a new set of proposals , which is expected to serve a guideline in respect of the minimum value .

According to information available, the bidder had offered a royalty of USDollars 2.25 per container which would add upto USDollars 125 million over the 35 year life span of the project. This compares insignificantly with the original bid of US Dollar 5.00 per container going up to USD 20.00 in 20 years.

The project has been financed by The Asian Development Bank to the value of US 300 million and the fresh bid is inadequate to meet repayment charges. It has also been revealed that the bidder, Aitken Spence had originally indicated a royalty of US Dollar 195 million which they later increased to US Dollar 250 million to fend off a rival bid.

In order to settle this issue, the Ports Authority could resort to re-tendering which would be time consuming and needs ADB clearance or request that it (the Ports Authority ) undertakes the construction of the terminal itself. A re-scheduling of the repayment to the ADB. would also become a necessity in such an instance.

Construction of the new terminal is an urgent necessity in order to be accessible to the larger new ships, if Colombo is to maintain its position as the trans-shipment hub of South Asia .