Sri Lanka launches new port built with Chinese loan

By Shihar Aneez | Reuters
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Sri Lanka flooded a new port on Sunday, built with Chinese assistance as part of a $6 billion drive to rebuild the island nation's infrastructure after a quarter century of war.

The Hambantota port, built at an estimated cost of $1.5 billion on the southern coast, will begin handling ships from November, officials said.

"This is part of making this country an emerging wonder of Asia," President Mahinda Rajapaksa said after launching the port.

Hambantota is one of four ports being built or upgraded under Rajapaksa's plan to renew the country's $42 billion economy by returning it to its old and lucrative role as a trading hub.

Built to handle 2,500 ships annually in the first stage, the new port is located along the East-West shipping lane and is ultimately meant to challenge Singapore's status as a regional shipping hub.

Sri Lanka now handles around 6,000 ships annually in its only port in Colombo on the western coast, which requires ships plying the East-West shipping lane to divert course.

Rajapaksa vowed to transform the island's economy with a series of infrastructure projects, soon after crushing a 25-year insurgency by the Liberation Tigers of Tamil Eelam last year.

"It is not sea water that will fill this port but the future prosperity of our nation. From this port will emerge our true economic independence, " he said in a speech.

China's involvement in the building of the port had raised concerns in India, but analysts said Rajapaksa had successfully handled Indian pressure. Security analysts in India worry that the port was part of Beijing's String of Pearls strategy to build a network of ports across the Indian Ocean.

Beijing has loaned over $425 million for the first phase of Hambantota project including the bunkering facility. Colombo is negotiating for a further $800 million loan for the second phase.

In addition to cargo handling, Hambantota will have a fully fledged bunkering facility and a tank farm project.

The port will operate 14 tanks with a total capacity of 80,000 MT. Eight tanks will be utilised for bunkering while six will be used for aviation fuel and LPG.

Except bunkering, all other activities including bulk cargo handling, storage facility, warehouses, transshipment have been opened for offshore investors.

© Reuters