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The Sri Lanka Ports Authority (SLPA) is expected to finalize an agreement this week for the construction of the fourth container terminal at Colombo, according to local sources.

The SLPA is understood to have held a three-day discussion on the Build, Operate and Transfer (BOT) deal with China Merchants Holdings (International) Co. and Aitken Spence & Co., which in 2009 submitted the only bid for the new $450 million Colombo terminal.

Construction of the new 2.5 million-containers-a-year facility, which will expand Colombo’s cargo capacity by 50 percent, is scheduled to commence in June and finish by the first quarter of 2012, according to SLPA Chairman Priyath Wickrama.

At present, the three existing terminals in Colombo - two operated by the SLPA and one by John Keells Holdings Plc. - are able to handle 4.5 million 20-foot containers per year.

It is estimated that this year the three facilities will handle a combined total of 4 million containers, up from 3.7 million in 2009.

According to SLPA Managing Director Captain Nihal Keppetipola, there had been an increase of over 15 percent in TEUs handled during the first two months of 2010.

The opening of the new Colombo South Harbour, which is projected to be completed by the end of April, is expected to further increase annual throughput and bunker sales volumes as a result.

“The Colombo South Harbour will be a mega hub port in South Asia, which will be a threat to the other ports in the region such as the Cochin harbour," Keppetipola told Daily News Business.

"Colombo Port is located in a strategic geographical position and has the advantage of being in the main East – West shipping routes. With the opening of the new terminal it will generate earnings, loyalty, rent and dividends to the SLPA," Keppetipola added.