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Lesson
Although the completion of the TA loan was delayed by 6 years, the TA loan is still considered a success given its significant contribution in facilitating the development of the first large-scale PPP transport infrastructure project in Sri Lanka. The extensions in completion time allowed adjustments to be made to ensure successful of implementation.

Project Number: 33019-013
Project Name: Colombo Port Efficiency and Expansion Project
Report Date:
Lesson
The government had explored the possibility of setting up a special purpose vehicle to construct the breakwater using private sector financing, but this was found to be problematic for the following reasons: (i) the breakwater would not generate revenue, (ii) the construction skills required for building breakwaters and terminals are very different, (iii) revenues would only be generated from the operations of the container terminal, and (iv) it would be difficult to attract private sector investment for the breakwater.

Project Number: 33019-013
Project Name: Colombo Port Efficiency and Expansion Project
Report Date:
Lesson
To mitigate the risk of lack of private sector participation, the selection of a private sector BOT concessionaire was a loan effectiveness condition for the ensuing loan. This ensured the selection of a credible private sector party to implement the BOT concession.

Project Number: 33019-013
Project Name: Colombo Port Efficiency and Expansion Project
Report Date:
Lesson
Given that this is the first large-scale PPP project in the transport sector, the TA loan was effective in providing continuous support to government agencies, allowing them to carry out the necessary preparations for the PPP, including preparation of the procurement documents, bid evaluation, and BOT concession agreement negotiations. To minimize professional liability, the MSC was subsequently single-sourced to act as construction supervision consultants for the ensuing loan to implement the HIW works.

Project Number: 33019-013
Project Name: Colombo Port Efficiency and Expansion Project
Report Date:
Lesson
For similar projects in the future, it may be beneficial to require reforms to be demonstrated as a project readiness criterion before project approval and implementation. Alternatively, if included in loan covenants, such institutional and regulatory reforms could be defined at a higher level - rather than as specific outputs - to allow the government more flexibility during implementation.

Project Number: 33019-013
Project Name: Colombo Port Efficiency and Expansion Project
Report Date:
Lesson
Realization of the full project benefits was contingent upon the public and private sector components being well coordinated and implemented as planned. Implementation of the private sector component - and especially selection of the private concessionaire for the first container terminal - initially presented a major risk. This was mitigated by linking the progress of selecting a successful bidder for private concessionaire with implementation of the breakwater infrastructure (public sector component) as a condition of loan effectiveness.

Project Number: 39431-013
Project Name: Colombo Port Expansion Project
Report Date:
Lesson
Since the works were interrelated, the HIW (harbor infrastructure works) was packaged as a single contract. The large size of the contract attracted good quality and experienced contractors.

Project Number: 39431-013
Project Name: Colombo Port Expansion Project
Report Date:
Lesson
The project is very large scale and complex in nature, so it was important to bring in quality consultants and contractors. Continuation of services from the main design consultants to provide construction supervision not only reduced the time for procurement but also resulted in minimizing liability risks and disclaimers of responsibility.

Project Number: 39431-013
Project Name: Colombo Port Expansion Project
Report Date:
Lesson
A key consideration was to draw an optimal balance of public and private sector participation. The government applied a PPP landlord port model whereby the public sector would deliver the basic breakwater infrastructure and private sector deliver two of the three container terminal facilities to be accommodated by the new breakwater. This approach has not only brought about significant efficiencies in delivery, it also resulted in tremendous financial leverage.

Project Number: 39431-013
Project Name: Colombo Port Expansion Project
Report Date: