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Tuesday, 21 August, 2001, 13:28 GMT 14:28 UK
Sri Lanka ports win reprieve
Destroyed plane on the runway of Katanyaka airport
Last month's attack in Sri Lanka has had severe economic repercussions for the country
Cargo ships are set to return to Colombo, as it emerges that high insurance premiums have been lifted.

Lloyds of London, the leading shipping insurer, has agreed to reduce insurance premiums for ships calling at the port, reversing an earlier decision to label the entire island a " war risk".

"The London underwriters have indicated that they are willing to bring down the premiums by almost 80%," Sri Lanka's Treasury Secretary, P.B Jayasundera, said.

The higher premiums had prompted several shipping lines to bypass Colombo, hurting an economy already hit by falling tourism.

Repelling attacks

A Sri Lankan delegation had met with London insurers late last week and persuaded them that Colombo port is not a high risk.

They pointed out that they had previously been able to repel attacks and that the defence of the port was in the hands of the Sri Lankan navy.

"They were quite impressed with the measures we have already taken and that is why they decided to reduce surcharge," Ronnie de Mel, Sri Lanka's shipping minister, told the BBC's World Business Report.

With 1,800 security personnel and three police stations at the port, officials maintained the port was safe.

He spoke of the catastrophic implications the decision could have on the economy.

"The idea was a total disaster as far as the economy was concerned. It had catastrophic results on imports and exports... Our main exports, tea, rubber, cocoa and garments, all became uncompetitive in the world market."

The cost of docking in Colombo had become so high that some shipping operators plan to bypass the port.

Some shipping lines said that once an extra war risk premium was added they had to pay about $450,000 per visit.

Sri Lankan shipping minister, Ronnie De Mel
"We have strengthened the defences of Port of Colombo"
See also:

17 Aug 01 | South Asia
Sri Lanka denies warhead charge
25 Jul 01 | Business
Sri Lanka's economy reels after raid
14 Aug 01 | South Asia
Sri Lanka tourism facing crisis
14 Aug 01 | South Asia
Sri Lanka drought action urged
04 Aug 01 | South Asia
Sri Lanka tightens security
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