- Power and port sectors dominate PPP investments
- Few investments exceeding $ 15 million remain
Close to 180 public-private partnership (PPP) projects valued at $ 5.3 billion have reached a financial close in Sri Lanka in 33 years, with only a few investments exceeding $ 15 million, the Asian Development Bank (ADB) said.
According to the Public-Private Partnership Monitor by ADB, during 1990-2023, 179 PPP projects reached a financial close, most of which concerned power (162 projects) and ports (five projects).
“The total value of these financially closed PPPs exceeds $ 5.3 billion. Many power projects have had low investment values per project, with only a few having an investment value of over $ 15 million,” it said.
ADB said that currently, ports have the highest PPP investment value, primarily due to one project contributing to most of the total ports investment value (Hambantota Port’s Lease–Operate–Transfer concession of $ 1.1 billion).
China Merchants Port Holdings Company Ltd takes the place of the highest private sponsor with an investment of $ 1.6 billion and John Keells Holding takes the second place with $ 890 million from 1990-2023.
As a result of the successful execution of PPP projects related to power via independent power purchase agreements, approximately 25% of the country’s electricity is currently generated through PPP projects.
Likewise, PPPs for ports have been pivotal in improving the quality and effectiveness of the country’s port operations. The terminals developed through PPPs currently manage around 70% of port traffic.
Procurement of PPP projects in Sri Lanka is done primarily through license schemes 11 (131 projects) and, to a lesser degree, unsolicited bids (54 projects). Competitive bids (13 projects) have traditionally been low.
Moreover, the ADB said that the majority of the financially closed PPP projects are active, while three projects have been cancelled, and one is distressed.
Projects that were proposed as PPPs and subsequently cancelled are the Southern Expressway development roads project and the East Container Terminal ports project.
“The main reason for these cancellations was changes in the government policy,” ADB said.
The waste-to-energy plant by Fairway Holdings is identified as a distressed PPP project, due to the adverse financial situation of the private promoter. Details of this project are mentioned under the solid waste management write-up.