Sri Lanka ports in crisis

Last month's attack in Sri Lanka has had severe economic repercussions for the country

A Sri Lankan delegation plans to meet with London insurers and attempt to persuade them that Colombo port is not a high risk.

Lloyds of London, the leading shipping insurer, have labelled the entire island a war risk zone following last month's rebel attack on the airport.

Already, the cost of docking in Colombo is so high that some shipping operators plan to bypass the port.

Unless the classification is changed, Sri Lankan officials say that jobs could be lost in an economy already hit by falling tourism.

Double the cost

Foreign shipping lines are complaining that the cost of docking in Sri Lanka's Colombo port has doubled in recent days.

Some shipping lines say that once an extra war risk premium is added they have to pay about $450,000 per visit.

On Thursday, Sri Lanka slashed refuelling charges in an attempt to woo back ships. The move effectively cuts the price of marine diesel from $330 per tonne to $175.

Eventually we are talking about this problem having a bearing on unemployment and also inflation

Parakrama Dissanayke, Ceylon Association of Ships Agents

But this may not be enough.

On Thursday a delegation headed by the Minister of Ports left for London, to appeal to Lloyds against the war risk classification.

Parakrama Dissanayke, the vice chairman of the Ceylon Association of Ships Agents, told the BBC's World Business Report that concern over safety is exaggerated.

"We feel that this perception of the underwriters in London is not the reality... we feel the port of Colombo is safe for commercial activities, but unfortunately, it seems that what prevails is the perception," he said.

He pointed out that the Port of Colombo was about 20 miles from Katanyaka airport, where the attack took place.

"The target was not the civilian airport or the civilians. They were targeting the airforce base, so the Port of Colombo and the airforce are two different locations," he said.

"It will result in high freight rates, simple economics come into play, where there is less capacity, prices go up," he said. "Eventually we are talking about this problem having a bearing on unemployment and also inflation."

Sri Lankan economy

The attack on Sri Lanka's airport in July looks set to have long-term implications for the economy.

Sri Lankan port officials are the latest to complain about the effect the airport attack has had on its industry.

Tour operators in Sri Lanka say the country's tourism industry is facing a crisis.

The vice president of the Sri Lanka Tour Operators Association, Lalin De Mel, previously told the BBC that 80% of bookings had been cancelled and some resorts and hotels were closing down because of a dramatic fall in tourism.

The cost to the government alone has been dramatic.

The Sri Lankan government estimates that it will have to pay $350m to replace the eight military jets that were lost in the attack.