Two shipbuilding contracts cancelled due to unstable economic situation

COLOMBO (News 1st); Two shipbuilding contracts have been cancelled, after Colombo Dockyard and Edda Wind AS (Edda Wind), Norway have entered into mutual agreement to cancel the contracts.

The two shipbuilding contracts were initially entered into for the construction and delivery of two Commissioning Support Operation Vessels (CSOVs). 

The Colombo Dockyard, issuing a statement, said that this decision had to be arrived solely due to the prevailing unstable economic and financial situation of the country.

As due to the poor credit rating of SD "Selective Default" and significant scarcity of foreign currency liquidity in the country, it was impossible to issue required guarantees continuously and to receive the milestone payments from the buyer, the Colombo Dockyard states.

Within such context, continuing with these two projects could have resulted in significant risks and uncertainties, the release read.

However, CDPLC has endured their maximum efforts to find feasible solutions by involving the top level Government authorities, both local and international banks and financial institutions and relevant diplomatic missions.

Despite greater efforts, it was understood that any feasible solution would not be forthcoming in near future. 

Considering the facts that the projects are still at their infant stage while foreseeing the greater risks for CDPLC in pursuing the projects, CDPLC's Board has decided that a mutual cancellation was the most prudent option at this point. 

While the terns and conditions of the cancellation of agreements with Edda Wind will be kept confidential between the parties, CDPLC's ongoing seven (7) shipbuilding projects for existing European and Scandinavian clients are progressing smoothly, the statement mentioned.

Moreover, CDPLC states that there is a high demand of ship-repair, and afloat repairs utilizing main port facilities in Sri Lanka ensure its business stability.