Walkers Colombo Shipyard (Pvt.) Ltd, a subsidiary of MTD Walkers PLC secured a US$4 million loan from the Asian Development Bank to be utilized for the development of the Shipyard of Walkers Colombo Shipyard.
The development will feature a state-of-the-art shiplift and transfer system which will accommodate vessels up to 70 metres in length and 1,250 tonnes.
The proposed loan will be the first ADB non-sovereign infrastructure loan in Sri Lanka since 2000. ADB is filling a critical market gap by funding a project—the first to cater to smaller vessels up to 1,250 tonnes —to serve the shipping industry of Sri Lanka and the region.
MTD Walkers PLC Group Executive Deputy Chairman Jehan Amaratunga expressed his sentiments on the transaction saying: “We have driven the diversification strategy of the group over the past few years and this is one of the many initiatives underway that has come to fruition.”
He further added: “We are keen to invest further in the marine engineering sector and enhance our Dollar income streams. We could have no better demonstration of the potential of the project and sector than having the ADB support us. In the long term, interest shown by the government to make Sri Lanka a maritime hub would only encourage more traffic to the region, more business and higher volumes of repairs.”
Walkers Colombo Shipyard Executive Director Mahesh Yogarajan said: “Funds raised from the MTD Walkers PLC debenture of three billion Rupees in September 2015 were invested into this forex earning project. The continual forex receipts will bring down the cost of funding with minimal risk as we have a natural hedge. Our main operational bankers were Commercial Bank of Ceylon who demonstrated immense support whilst the ADB facility was being secured. The IRR of the project has been boosted by the export earnings from built-to-order ships for overseas clients. The process involved comprehensive social, environmental, technical and financial assessments which involved multiple teams of sector experts from right across the region. This in-depth process helped us fine tune the project and strategy itself by identification of service niches that could be harnessed to improve project financial indicators.”
The project is in line with ADB’s Sustainable Transport Initiative, which recognizes regional cooperation and integration as an emerging need and challenge that should receive more ADB support. This is to be done by addressing constraints to trade growth, such as the indirect costs associated with unreliable transport times, border-crossing delays, and handling and storage costs that result from poor terminal infrastructure.