Cost Overrun

Apr 19, 2011 (LBO) – A new port being built in southern Sri Lanka could cost 41 percent or 148 million US dollars more because of additional rock blasting, re-shaped breakwaters and rising raw material prices, a newspaper report said. The additional cost of having to blast and remove bedrock found in the harbour amounts to 45 million US dollars (4.8 billion rupees), Sri Lanka’s The Sunday Leader It cited an email interview with the chairman of the state-run Sri Lanka Ports Authority Priyath Wickrama.

The first phase of the port, being built by Chinese contractors with Chinese loans, was completed late last year.

The newspaper said the extra costs include 82 million dollars (8.9 billion rupees) for escalating costs of raw material, 9.25 million dollars to build a head-office building, and 6.8 million dollars for changes in breakwater design works.

Another 16.90 million dollars in extra spending will be to buy port equipment.

The capital cost of phase one of the Hambantota port project was originally estimated at 360 million dollars and largely funded with a commercial loan from China’s Exim Bank, the Sunday Leader newspaper said.

The interest payments on the loan have also c