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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Integrated development of Port City of Trincomalee

Integrated development of Port City of Trincomalee

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Manager - Equity Analytics
Manager - Equity Analytics
Trincomalee is also known as Gokkana (Pali) and Tirukonamalai (Tamil). The city is built on a peninsula which divides the inner and outer harbour. It was a major maritime and trading post since the 11th century under the control of Sri Lankan kings.

During the colonial expansion into the Indian Ocean, Trincomalee was occupied by the Portuguese, Dutch, French and finally the British, who used this natural harbour.

The Portuguese built a fort to control the area and the Dutch expanded and built another to protect the harbour. The largest of these is Fort Fredrick built in 1624 by the Portuguese and exchanged hands until the British took over it in 1795. The smaller Fort Ostenburg was built on top of the Ostenburg ridge at the entrance to the inner harbour of Trincomalee.

With the beginning of the 20th century, the size of the Royal Naval Dockyard of Trincomalee was increased during and after World War I. A large tank farm was built close to the dockyard to store fuel oil for any size fleet along with dry docks and maintenance facilities to support any ship of the Royal Navy. Due to the increase in personnel on shore and from visiting ships, the Royal Naval Hospital was established.

From 1920, the British deployed coastal artillery on Osternburg ridge, which was within the dockyard, to protect the entrance to the Trincomalee Harbour and became a major Royal Navy base in the Far East. At the same time, the first purpose built Royal Air Force Station was built across the harbour, near the China Bay. The Royal Air Force station RAF China Bay was soon operational to provide air defence to Trincomalee.

With the onset of World War II, Trincomalee’s defences were boosted and with the fall of Singapore was the home of the newly formed Eastern Fleet under the command of Admiral Sir James Somerville.

The presence of the British Forces in Trincomalee ended in 1956 when the dockyard was taken over by the Royal Ceylon Navy.

The US Naval Base at Subic Bay in the Philippines, a natural deep water port, was handed over to the Philippines in 1991 with US$ 8 billion worth facilities (FS of the DM of March 8, 2013). In comparison, the most strategic deep water port in the entire Indian Ocean was handed over to Sri Lanka by the British in 1956, nearly 35 years before Subic Bay and consisted of all facilities in addition to an air defence system. Accordingly, if a valuation was done on this military complex in Trincomalee by the British in terms of 1956 dollars, it would have far exceeded the US base at Subic Bay.

Port City of Trincomalee and its potential

Since 1956, there was hardly any development in this port city except for the naval dockyard, oil storage and bunkering at China Bay, a clinker grinding and packing plant and a flour mill. Further, the loading of heavy mineral sands brought by barges from the Pulmoddai Plant, 38 miles north-east, was carried out and this activity stopped with the construction of a loading pier at the plant.

Although this city is a major attraction with its long history of the strategic port with the largest tank farm in the Indian Ocean and ancient Buddhist and Hindu temples, there were very few hotels and other civic facilities to cater for a large influx of visitors both locally and from abroad.
It is unfortunate that this city, with its huge potential for integrated development of tourism, heavy industry, strategic port for shipping, recreation including whale watching, scuba diving, surfing at a location south in Arugam Bay, safaris to the wildlife parks to observe elephants, leopards deer, etc. was completely neglected for over 50 years since the British left.

Integrated development of Port City of Trincomalee

I shall deal with the above under the following:

Trincomalee Harbour

The full potential as a maritime hub between the Middle East and Far East has not been realized. No significant jetties had been constructed and the potential for ship building and repair with dry docks has not been seriously considered by the governments since 1957.
Since Trincomalee is the only natural deep water port in the Indian Ocean, immediate action should be taken by the Government of Sri Lanka (GOSL) to carry out a feasibility study on how the maximum utilization of this port could be achieved.

Heavy industry

Sampur, located on the outer harbour south of Foul Point, has been identified for development of heavy industries. I was consulted by an Australian consortium to set up a smelting complex for steel by importing scrap iron and also a copper smelter with raw materials from Brazil. This group also requested me to advise them on the Pulmoddai mineral sands deposit as well as the Seruwila copper magnetite deposit and the quality and quantity of these minerals and ores for processing further for value addition. I am not aware whether any progress has been made.

It is known that an Indian company is to build a coal fired thermal power plant of 500 MW capacity and work has not commenced as yet.

The land between Clappenburg Bay and Tampalagam Lagoon was identified as a suitable site for a Phosphate Plant in 1980s. A twin berth jetty for 40 000 DWT vessels for import of raw materials and export of finished products was planned. This project never got off the ground although the GOSL was to hold the majority shares. This site is ideal for an oil refinery.

Tourism and recreation

Trincomalee is the only city in the country that has potential for a diversified tourism industry to attract foreigners and locals.

The cultural tours to places of ancient history dating back to the 5th century BC are located within a radius of 50 miles.

The unspoilt beaches north of the city for over 30 miles will be a pristine area for tourists who love the sea. Scuba diving for ship wrecks and water sports are major areas that need expansion.

Maritime park

The seafront within the outer harbour is an ideal site for a marine park as in California. This park should contain fish and other marine species in large transparent tanks for the visitors to view. It is suggested investors should study such parks abroad.

Whale watching is another big time attraction.

Maritime Museum

Action has already been taken to set up a museum recently. There is potential to expand with the assistance of the British as well as Dutch and Portuguese Maritime Museums and make it a showcase for tourists as in South California.

Wildlife safaris

Conducted tours could be arranged to the National Parks close by.

Use of China Bay tank farm

It has been reported that this tank farm has been leased to a company with the majority shares held by a foreign company. This storage facility has 99 tanks that could hold 12 000 kiloliters and is the largest located between Asia and Singapore.

At present, only 15 tanks have been revamped in the lower part and the rest are not used. Since the ownership of these tanks is with the GOSL, it is suggested that the balance 84 are rehabilitated with foreign collaboration. To this end, the GOSL may value the facility including the land and use this valuation as its equity for working capital thus keeping the majority shareholding as debt to equity for such activity is 4:1.

Trincomalee Metropolitan Authority

Since the above activities should be effectively coordinated, it is suggested that a separate legal entity called the Trincomalee Port Metropolitan Authority be created and the city zoned to accommodate the above development activities.

In conclusion, the potential of this port and the airport was not even studied earlier due to the strategic location and big power rivalry. It is recommended that a master plan incorporating the above be prepared with the World Bank assistance if not done earlier and international companies requested to form JVs, preferably with majority GOSL shares. The IFC (investment arm of the World Bank) will also be interested in such diversified activities.

Further, long-term plans should be drawn up to expand the China Bay airport as a hub for international flights connecting KIA and Mattala.

Accordingly, Sri Lanka can be a major aviation and maritime hub in the Indian Ocean.

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