Hambantota Port Development: Key Insights and Challenges
School
Harvard University**We aren't endorsed by this school
Course
URBAN PLAN 122
Subject
Civil Engineering
Date
Dec 10, 2024
Pages
4
Uploaded by Master_of_Self_08
James TufteURBAN_DESIGNURBAN_DESIGN_191_SURVEYThe Hambantota International Port is a deep water port in Hambantota, Sri Lanka, notable for its 99-year lease to China Merchant Ports.Opened in 2010, it is Sri Lanka's second largestport, after Colombo.In 2020, the port handled 1.8 million tonnes of cargo.Construction of the port commenced in January 2008.In 2016, it reported an operating profit of $1.81 million but was considered economically unviable.As debt repayment got difficult, the newly-elected government decided to privatise an 80% stake of the port to raise foreign exchange in order to repay maturing sovereign bonds unrelated to the port.Of the two bidding companies, China Merchants Port was chosen, which was to pay $1.12 billion to Sri Lanka and spend additional amounts to develop the port into full operation.In July 2017, theagreement was signed, but CMPort was allowed a 70% stake.Simultaneously a 99-year leaseon the port was granted to CMPort.As of May 2024, the port has transformed into a busy transshipment hub in the Indian Ocean, specifically for vehicles, facilitating a turnover of 700,000 units per month.Hambantota is poised to increase its involvement in the bunkeringand oil refining industries, and it has the potential of becoming a significant hub for cruise activities.== Development history ==The United National Front had pledged to build a seaport in Hambantota on winning the 2001 Sri Lankan parliamentary election.After victory, Sri Lankan Prime Minister Ranil Wickremesinghe announced the "Regaining Sri Lanka" economic development programme in 2002, which identified the Hambantota port for development.The plan also included
building a refinery, petrochemical industries, a coal powered thermal power station, and a desalination plant.Beginning in the early 2000s, the Sri Lankan government sought to obtain funding from international creditors to develop Hambantota.: 92 === First feasibility study ===In June 2002, Canadian engineering and construction firm SNC-Lavalin was invited to carry out a feasibility study, with funding from the Canadian International Development Agency.: 92 The study concluded that the port could be feasibly developed in three stages costing US$1.7 billion.It recommended that a joint venture between the Sri Lanka Ports Authority and a private consortium be set up to undertake the project under a build–own–operate–transfer arrangement.A steering committee of the Ports Authority rejected the report as being non-comprehensive and lacking in primary research.The recommendation to begin container operations at the first stage of the project was criticised for ignoring the potential impact on existing operations at the Port of Colombo.Canada was concerned about financingthe project due to Sri Lankan domestic politics and the project did not advance.: 92–93 === Second feasibility study ===During his 2005 presidential campaign, Hambantota native Mahinda Rajapaksa had pledgedto revitalize Hambantota's economy.: 93 After his election, a second feasibility study was commissioned, this time from Danish consulting firm Ramboll.: 93 Ramboll reached conclusions similar to those from SNC-Lavalin.The Ramboll study recommended the Hambantota port to bring in revenue by allowing the transport of non-containerised cargo before expanding the port to handle cargo containers, to allow the Port
of Colombo to reach its capacity.The Rajapaksa administration approached both the United States and India with the Ramboll study and sought funding for the Hambantota Port Project.: 93 Both countries declined.: 93 === China ===One of the first companies involved in the port project was China Huanqiu Contracting and Engineering Corporation, a subsidiary of the state-owned China National Petroleum Corporation.: 93 China Huanqiu Contracting & Engineering Corporation had been doing business in Sri Lanka since 1997.: 93 Following a 2005 agreement between Sri Lanka and China that both countries would facilitate the involvement of Chinese companies in Hambantota's refueling facilities and oil tank projects, China Huanqiu Contracting & Engineering Corporation became a contractor at Hambantota.: 93 After India declined to fund development of the port, Sri Lanka next sought funding from China.In July 2006, Sri Lankan foreign minister Mangala Samaraweera met in China with Li Ruogu, the president of the Export-Import Bank of China (China Exim).: 93 After this visit, Sri Lanka and China agreed that both countries would encourage Chinese companies to participate in the port project and encourage the use of concessional loans from China to finance the project.: 93 Sri Lankan President Rajapaksa visited China in February 2007 and the visit resulted in China's decision to fund the port development.: 93–94 === Belt and Road Initiative ===The port is viewed as part of the 21st Century Maritime Silk Road (the maritime part of China's Belt and Road Initiative) that runs from the Chinese coast via the Suez Canal to the
Mediterranean, and from there to the Upper Adriatic region of Trieste with its rail connections to Central and Eastern Europe.== Location and plans ==Sri Lanka is situated along the key shipping route between the Malacca Straits and the Suez Canal, which links Asia and Europe.An estimated 36,000 ships, including 4,500 oil tankers, use the route annually.A new port will help relieve pressure on the Colombo port, and also provide services to ships that normally take three-and-a-half-day detours from their shipping lanes to receive these services, including refueling, maintenance, logistics and buying provisions and medical supplies.== Construction ==The Sri Lankan government contracted with China Merchants Group, one of that country's state-owned enterprises, to build the port.: 68 The port was constructed in two phases.