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by Ravi Ladduwahetty

World-renowned Fortune 500 conglomerate and shipping and ports giant - Peninsular and Orient Navigation Group of the UK (popularly known as P&O) which operates Colombo Port's South Asia Gateway Terminals (SAGT) will project Colombo as one of the best ports in the region.

"SAGT is a world class facility with world class efficiency," outgoing Chief Executive Officer of South Asia Gateway Terminals (Pvt) Ltd (SAGT) John Buckley told the Daily News in a farewell interview yesterday.

SAGT is the operators of the Queen Elizabeth Quay of the Colombo Port on a Build-Own and Transfer (BOT) basis. The SAGT equity is shared between P&O Ports (16.25 %), John Keells Holdings Ltd (26.25%), P&O Nedlloyd (10%), SLPA (15%) and Evergreen Shipping (10%) and the ADB, IFC and CDC who have 7.5 % each.

Buckley was in Sri Lanka as SAGT's CEO from September 1999 and will be taking up an appointment with Asian Terminals (Pvt) Ltd in Manila, Philippines in which the P&O Ports has a controlling stake and which handles 80% percent of the cargo in that country. His successor will be Mackiek Kwaitkouski, an Australian of Polish origin and from P&O Ports in Indonesia.

Buckley also said that P&O Ports in SAGT will consider investing in the Colombo South Port when the project commences. Following is the interview:

Q: As one of the founder executives of the SAGT senior management team and as the first senior executive of P&O Ports at SAGT, how do you see the operations and the transformation of the Queen Elizabeth Quay at the Colombo Port from the time it was under the SLPA to what it is today?

A: The QEQ was originally meant to be a container port. With the advent of the JCT, the focus was shifted there. It was a small container operation and a warehouse for LCL cargo. There were a few T cranes. We are in the process of making it an international container terminal. We are about two thirds through and expected to finish by next year.

Q: On a personal note, you were very heavily involved in the operations in the setting up of the project. Was this one of your characteristic attributes or did you do it through sheer necessity?

A: We started with almost nothing, without access to the site. We did not have equipment. Once the agreements were in place, we had to recruit the workforce and also mobilise the civil contractor- Hyundai Engineering. It was not a green field site or something new. The QEQ redevelopment was a massive undertaking to combine an operating terminal with a redevelopment site in a space such as the QEQ was fairly difficult.

Q: At the commencement of the project, the port trade unions and certain section of the media were vociferous critics of the project, alleging that the Government was hoodwinked into the project. How would you counter this in terms of the performance that you have achieved vis-a vis the volumes that the Sri lanka Ports Authority would have achieved if the project did not come under the purview of SAGT?

A: It is true that there were critics at the start in a port where the Ports Authority had a monopoly amidst Government bureaucracy. Most of the ports in the world have turned towards privatisation as it has been proved that the public sector cannot compete with the private sector in terms of port operations. This is not possible and this is applicable to Sri Lanka and SAGT.

What we have achieved as a private operator in the port of Colombo, has been significant. We have done nearly 55,000 TEUs with three T cranes while JCT has done only 107,000 with 14 cranes. SAGT is having a world class operation. We will continue to carry on with our business. We have neither agendas nor a bureaucracy. Our focus is quite clear.

Q: How much has SAGT given the Government in terms of royalties up to now and what is the real potential?

A: The total earnings for the Government from SAGT is around US$ 30 million annually. In addition, there are the navigational charges the marine charges for all the ships those come here. There is a benefit that is difficult to put a cost on and that benefit is a world class port facility operating at world class efficiency.

Q: At what stage is the SAGT project right now and what is the operational potential for the future?

A: We are about two thirds over. We will handle over 700,000 TEUs this year with two berths and up to 900,000 TEUs next year with three terminals. It will be over a million from the following year onwards.

Q: How do you see the role of SAGT in the future?

A: What we have to do is to do the best in what we do in making SAGT a world class terminal. We have leading cutting edge technology with both software and hardware. We will give shipping line customers a very professional service.

Q: What are the plans that the P& O Group has for Sri Lanka, India and the Asian region?

A: In Sri Lanka, we have to get on with the project. That is our main business. We have to demonstrate to the world that we have a world class operation. Colombo can be a hub for shipping lines. We need to consolidate on that. In terms of other interests in Sri Lanka, our activities are concentrated on SAGT and are keen to participate on the South harbour as well.

We will have a special marketing plan for Colombo as one of the best ports in the region. We have been working on that. We have a core of happy customers who have been identified with that image. In terms of the region, we have turned around the Chennai port which has been incredible not only in the region but in the whole world. P&O has the majority shareholding in both Chennai and Nava Shiva in Mumbai

Q: Do you see them as potential threat for the SAGT operations in Colombo? A: Not really. They are different markets basically for local imports and exports. They do not have what Colombo has in a geographical location and in terms of a transhipment hub. I do not see it as a threat, but as a benefit.

Q: How do you see the role of the Ceylon Association of Ships Agents (CASA) in Sri Lanka's shipping industry where they feel that the industry should not be fully liberalised where foreign companies could own up to 100 percent of the equity?

A: After four-years in the Colombo port, I think the whole thing is a red herring. What matters is not whether it is 100 per cent liberalised or not. What needs to be done is for Colombo to be run as a world class port not only inside but outside the Port as well. It is how the connection between the agents and the port operate. They go hand in hand and in a world class manner. The ownership does not bother anyone. It is totally irrelevant.

Q: A substantial proportion of Sri Lanka's shipping agency business is held by the three premier blue chip corporate conglomerates- John Keells Holdings Ltd (which owns a 26.25 percent equity stake in SAGT), the Aitken Spence Group and the Hayleys Group which have among them, shipping agencies, freight forwarding, distriparks and other aspects of cargo logistics management et al. Do you agree/disagree that the time has come for them to own ships and run them in the region for a start, another value addition for the corporates and in turn, the Sri Lankan shipping industry?

A: Running ships and running ports are different business all together and independent of each other. Being a specialist in one does not necessarily mean that one can do the other. It is true that ships come to ports and that is about the end of the similarity.

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