Sri Lanka’s Hambantota Port first phase, a burden of USD51mn per year: SLPA


July 13, 2015 (LBO) – Sri Lanka’s government had to pay 51 million US dollars per year as loan repayments for the first phase of the Hambantota Port, Sri Lanka Ports Authority said.

The first phase of the Port commenced in 2007 and incurred over 500 million US dollars while 90 percent of which was granted by Chinese EXIM Bank.

“Proper feasibility studies were not carried out regarding the viability of re-paying the large loan re-productively,” the Ports Authority said.

“This resulted to re-pay US$51mn or more than Rs07bn in Sri Lankan Currency per year,”

“At present, 60 percent of the value of the port is required to re-pay the large amount of the total debt borrowed by the Port,”

“It had been a burden to the Port and it was not a profit earned when compared to the investment incurred.” the Ports Authority said.

This was revealed at the sea water filling ceremony held at the Hambantota Port recently.

Excavation of the basin has already completed and filling of sea water to the basin was taken place under the guidance of Port and Shipping Minister Arjuna Ranathunga.

The total size of the water basin is 84 hectares and consists of 14 million cubic metres of sea water.

After the water filling, the Coffer Dam which was constructed with a length of 110 metres under first and second phases will be removed.


The construction work of the second phase of the Port has commenced in 2012, with the aid of 808 million US dollars.

Under the second phase the authority is planning to construct a regional ship repairing centre at the Hambantota Port.

“Hambantota Port will be in possession of ship repairing which would consist of dry docks and floating docks valued at US$400mn.” the Ports Authority said.

Actions are also being taken to invite international investors for investment opportunities for third time, the Ports Authority said.

“It is also planned to bring a Petroleum Chemical Industry and other international investors.”

The activities of fuel storage complex had been commenced in the year 2009 with a total investment of 108.9 million US dollars.

Fourteen oil tanks with the capacity of 80,000 cubic metres had been constructed under this project.

“Among these tanks, there are 08 tanks of fuel for ships, 03 tanks of fuel for aero planes and 3 tanks for liquidized petroleum.” the Ports Authority said.

Handling of transshipment of vehicles was commenced in the Port of Humbantota in 2012.

The government is to expand the activities of transshipment with the co-ordination of vehicle manufacturing companies and specific shipping lines transporting vehicles in mega vessels through the shipping routes.

“The Port of Hambanthota will be able to transship the vehicles manufactured in Japan and India to East-Africa, Gulf region and Europe, through the Hambanthota Port.” the Ports Authority further said.

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6 years ago

When you start up a business venture, due you always have a guaranteed profit in the initial stages ? Is the projected profit supposed to cover all of the interest payments ?
Given it’s location, is the idea of a port here of no future benefit to Sri Lanka ?
If financial irregularities were present at the onset, this should be investigated and proved.
What needs to be done is to have a proper business development plan and make this an asset, rather than use this as a political weapon.

Ranil Lokuge
Ranil Lokuge
6 years ago

Any new infrastructure project let alone a port need time and further investment to run at full throttle and thereby profits. Negative attitude and statements by the minister in charge will not help attract investors. I wonder whether that is the aim of this minister.

6 years ago

This port is one of megalomanic projects of Mahinda Rajapakse which are an annual drain on the peoples wealth while many do not have a good meal daily and thus are tryinf=g to escape abroad.

6 years ago
Reply to  Das

It was built on the wrong location with higher cost.. but its not wise to keep blaming. We need to turn this to a profitable port by adding freezones and encouraging transshipments