Sri Lanka’s Multi-Billion Dollar Ocean Expressway
… and it’s impact on this little island nation.
The island at the center of an expressway:
For centuries, the world’s maritime traffic on the Great East-West Shipping Lane, (transporting cargo both to and from the Atlantic ocean, starting from east-coast of the USA, via UK, Europe, the Mediterranean Sea, through the Suez Canal, passing Sri Lanka, Singapore, Hong Kong, China, South Korea, Japan, and to the Pacific Ocean) has been moving very close to Sri Lanka, strategically located at the Center of Indian Ocean, taking the shortest and the fastest possible route from Aden to Singapore, and also on the return voyage.
A sea lane that saves billions for global trade:
This “Ocean Expressway” that passes through the “Sea of Sri Lanka” enables vessels to sail, just outside the Sri Lanka’s territorial waters – about 10 miles off the Port of Hambanthota, located at the southern most tip of Sri Lanka. This course allows for cargo ships to sail in a straight line rather than sailing in a circular route outside of the 200 nautical mile Exclusive Economic Zone (EEZ) of Sri Lanka.
This path enables a vessel to reduce it’s distance travelled by 400 miles, thereby saving one day of sailing time (Aircraft also fly across this zone which saves about one hour of flying time).
Every year, 35,000 ultra-large container vessels (ULCV) and bulk carriers, and another 5,000 ultra large crude oil carriers (ULCC) journey through Sri Lanka’s Ocean Expressway which realizes importers, exporters, freight companies and consumers, savings to the tune of US$8 billion per year – without a cent of revenue being given to Sri Lanka.
To provide some perspective, Egypt earned US$6 billion in 2020 from the 20,000 vessels that passed through their Suez Canal. In comparison, Sri Lanka’s “Ocean Expressway”, not only enabled vessel and aircraft owners/operators to reduce their cost and enhance profits by aboutn US$8 Billion per annum, but also allows them to offload Carbon Dioxide (CO2) emitted to the tune of 20 million tons annually on Sri Lanka without any levy. Sri Lanka currently only earns revenue from the 5,000 ships that make direct calls annually to it’s ports. The 45,000 aircrafts fly over Sri Lanka annually more or less in a similar manner. Assuming additional risk with no reward: Over a long period of time Sri Lanka’s economy has been bombarded by the above mentioned CO2 pollution causing crop failure, droughts, floods, landslides, famine, human-elephant conflicts, and threatening our food security, supply of clean water and our bio diversity.
This ocean pollution is also driving away the endangered Blue Whales off the island’s coast, and diminishing our fish supply in the “Sea of Sri Lanka”. The incremental yet compounding effects have begun to threaten the very livelihood of the peasant farmers, fisherman, and self-employed daily wage earners who comprise of more than half of Sri Lanka’s population – leading to increase in poverty ratios, and threatening sustainable development.
Sri Lanka’s “Ocean Expressway” carries about 30% of the world trade, transported by the world’s largest TEU 20,000 capacity container ships, 350,000 MT capacity bulk carriers, 300,000 MT crude-oil tankers and aircrafts with 500 seating capacity.
The annual world trade carried by these 35,000 vessels, 5,000 tankers and 45,000 aircrafts crisscross Sri Lanka’s EEZ, in the “Sea of Sri Lanka” annually, at their pleasure and convenience, without a levy for passage. Big producer and consumer economies, big corporations, big governments and their citizens around the world all benefit from the resulting reduced transportation costs, and faster delivery, whilst the fragile economy of Sri Lanka and its citizens have been burdened by the pollution being off-loaded 24 hours per day, and 365 days of the year for decades.
Sri Lanka as a country had emitted 21 million tons of CO2 as documented in the 2018 World Bank study, and has taken on an additional of 20 million tons of CO2 disbursed by passing ocean carriers. This situation leaves the small island of Sri Lanka having to absorb and neutralize a pollution problem double in size without any assistance.
This burden does not allow for a level playing field, and is not tenable. These difficult conditions have continually eroded the Sri Lankan GDP by about 8% each year, for decades.
In addition to the economic impact of these environmental factors affecting Sri Lanka, due to Covid-19, the nation has also lost US$4 billion per year in tourism income, and the nation’s external reserves fell to its lowest level of US$3 billion in July 2021 from a pre Covid-19 high of US$8 billion in December 2019. This has caused the parity to the US dollar to rise from LKR 190 per dollar to LKR 225 per dollar. Further, Sri Lanka’s debt service requirement of US$6 billion per year, the recent 60% rise in crude oil import prices, and the pressure to ease temporary import restrictions that were imposed to arrest the foreign exchange shortage is now crippling the economy.
This situation now requires thinking that is “out of the box”, as well as the implementation of immediate measures to mitigate this foreign exchange crisis.
An opportunity to mitigate an immediate problem:
The immediate economic crisis facing Sri Lanka, comprises of an external debt which stands at US$60 billion (about 80% of Sri Lanka’s GDP), a debt service requirement of US$6 billion per year and dwindling foreign exchange reserves of US$3 billion as of July 2021 from a pre Covid-19 high of US$8 billion in December 2019.
Current land based development programs being implemented to rebuild foreign exchange levels are either facing opposition from the people, owed to enforced acquisition of scarce land, or are not progressing at the required pace needed to overcome the burden of this economic problem.
By looking to Sri Lanka’s “Ocean Expressway” and the unused “Sea of Sri Lanka” within our Exclusive Economic Zone (EEZ), there lies an opportunity to negotiate a waiver of the repayment of external debt from global trade partners.
In this regard, as an independent professional and citizen of Sri Lanka, I have researched and published a concept paper entitled “SEA- Sri Lanka’s Competitive Advantage” (published 22nd March, 2021 – ISBN 978-624-97686-0-4) proposing that international development partners, who are the ultimate beneficiaries of the economic benefits of cheaper and quicker cargo delivery via Sri Lanka’s “Ocean Expressway”, could waive off our external debt repayment obligations against the pollution damage caused to Sri Lanka by ocean passage though our Exclusive Economic Zone (EEZ).
A global initiative for consideration:
The urgent attention of the big governments and economies, the G7, BRICS, and multilateral agencies such as The World Bank, BRICS Bank, IBRD, IDA, IMO, WTO, and UNDP are requested to work out a road map for the debt repayment waiver for Sri Lanka.
Further, the world’s largest corporate enterprises who are also beneficiaries of cost savings of passage through Sri Lanka’s EEZ, are also respectfully requested to understand, support and redress Sri Lanka’s predicament. The World Bank and World Trade Organization (WTO) etc., will have such data.
The debt repayment waiver being asked for from the beneficiaries of passage and use of Sri Lanka’s “Ocean Expressway” is to provide Sri Lanka with a quick supply of life-giving economic oxygen. Providing time and opportunity for the nation’s economy to regain it’s strength and continue it’s development going forward.
Well wishers of Sri Lanka – Please support this urgent humanistic gesture for Sri Lanka, review and share with others to create awareness and exert continuous pressure on the “powers that be” as a global initiative.
The above urgent action plan has been formulated by Ranjith Wickramasinghe, FCMA (UK), FCCA, ACC.Dir.SL, CGMA, and JP.
Profile: An Independent Financial Advisor and a Consultant, and an Accredited Director of Sri Lanka, former Chairman Sri Lanka Ports Authority and Ceylon Shipping Corporation; Former Head of Finance/ Planning Zambia Consolidated Copper Mines ( NYSE Listed Company); Former Finance Director George Steuarts (the oldest company in Sri Lanka) and a former Independent, Non Executive PLC Director.
Published Works: “An Independent Professional’s View to Turn Around the Economy of Sri Lanka” (1st October 2019); “Urgent Plan to Mitigate Covid-19 Impact On Sri Lankan Economy – Concept Paper” (10th June 2020); “A Rolling Budget & Five Year Plan to Turn Around the Post Covid-19 Economy of Sri Lanka” (ISBN 978-624-96562-0-8, 31st July 2020); “SEA- Sri Lanka’s Competitive Advantage” (ISBN 978-624-97686-0-4, 22nd March 2021), and the above document “Sri Lankan Multi Billion Dollar Ocean Expressway …and its Impact on this little island nation” dated 2nd September 2021 (ISBN 978-624-97686-1-1).
Contact: ranjith_wickramasinghe@ymail.com
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