The close relationship between Sri Lanka and China was underlined recently by the formal handover ceremony to mark the transfer of control over Hambantota port to China Merchants Port Holdings. This follows a deal signed earlier this year which granted a 99-year lease to the southern port to the Chinese company.
Hambantota had originally been opened in 2010, and expanded in 2012, but has struggled to secure significant levels of cargo traffic and the government of Sri Lanka was incurring heavy losses as a result. It is hoped that the agreement will breathe new life into the deepwater port, which is strategically located close to the main shipping trade lanes between Asia and Europe.
CMPH has agreed to invest up to US$ 1,120 million into Hambantota port, including US$ 973 million for an 85 per cent stake in Hambantota International Port Group (HIPG), a subsidiary of the Sri Lankan Port Authority. This money is to be paid in three tranches within 6 months from start of the concession.
HIPG will own all port assets and manage day to day operations. It will also be responsible for developing Phase 3, and any further expansion of Hambantota port. Following the first two phases of development, Hambantota has 10 berths with a quay length of around 3500 m, which can handle containers, dry bulk, ro-ro and general cargo. The water depth alongside the quays and in the navigation channel is 17m, allowing the port to handle large, new generation vessels.