Sri Lanka offers $50m security on port

By Nirupama Subramanian

COLOMBO, AUG. 20. Insurance companies are considering a sharp reduction in the high `war risk' surcharge imposed on shipping lines operating to Sri Lanka after a Government offer of a $50m guarantee on the Colombo port, press reports here said.

The state-run Daily News said the entire surcharge would be removed within two weeks following guarantees by the Government, but this report could not be immediately confirmed.

The reduction was agreed upon after talks between a Government delegation led by the Minister of Ports, Mr Ronnie de Mel, and the War Risk Rating Committee of Underwriters in London.

With this, the surcharge per call at the Colombo port could come down upto a maximum of $150,000, the reports said.

At the moment, insurance companies are levying a war risk surcharge on ships stopping at the Colombo port from anywhere between $30,000 and $480,000 per call, depending on the size and age of the vessel and length of the halt.

The insurance companies placed the port in the ``war risk'' category after the July 24 LTTE attack on the airport.

The high surcharge has hit shipping operations, with many lines bypassing the port, creating a ripple effect right through the economy. Freight rates have gone up with Sri Lanka's two main exports, garments and tea, already beginning to feel its impact. Imports too have been affected.

With the effects of the LTTE attack on the airport beginning to hit the economy Sri Lankan business is panicking. The tourist industry has warned of hotel closures and job cuts. Four major groups have made plans to lay off 1,500 employees by the end of this month as hotels go empty. But it is the insurance hike on ships that has brought the war home. It is no longer just an economic crisis, but a looming national disaster, which business leaders have stressed can be resolved only by pushing for peace talks with the LTTE.

At the weekend, five leading advertising agencies were in talks with industry chambers to devise a joint campaign appealing to the Government to find a way out of the current crisis.

``From the businessmen's point of view, the minute the Government shows interest in making peace with the LTTE, there will be less war risk and the environment for business will immediately improve,'' said a representative of one advertising agency.

A top executive with a leading exporter said the Government should ``at least be seen as talking to the LTTE''.

In order to arrest the rapidly dropping confidence, the Government announced last week that it had taken all steps to strengthen security at the Colombo port. Lanka Marine, a subsidiary of Ceylon Petrol Corporation, is offering marine fuel services at the Colombo port in line with Singapore rates, to attract more ships.

The Government also announced `liberal access' to foreign carriers for operating air cargo services and waived ground handling fees at the Bandaranaike International Airport. In addition, the President has ordered the suspension of the `visa fee' charged on garment exports.

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