SL Plans Naval Dockyard at China-built Hambantota Port

By PK Balachandran

COLOMBO:The Sri Lankan cabinet on Wednesday approved a proposal by the Minister of Ports, Arjuna Ranatunga, to do a feasibility study and prepare a plan to build a naval dockyard at the Chinese-built Hambantota port in the island’s deep south.

Built with a Chinese loan of US$ 316 million in 2010, the port has been lying virtually unused.

It received heavy flak from the opposition United National Party (UNP) and the media after the parliamentary Committee on Public Enterprises (COPE) reported in 2013 that  only six ships had called at the port in 2011, and 18 in 2012.

In 2013, however, it was reported that 100 ships had called since November 2010. In 2012, the Mahinda Rajapaksa government had declared that Hambantota port will be a Free Port with exemption from all levies except handling charges. It was also declared as a transshipment port for light commercial vehicles and vessels carrying such vehicles had to dock there.

And yet, the usage was much below expectations. The poor earnings and also the hefty annual interest payments on the Chinese loan taken for the project invited heavy criticism. The annual interest payments were:  LKR 2,208 million or US$ 16.5 million in 2012; LKR 2,479 million or US$ 18.5 million in 2013; and LKR 2,233 million or US$ 16.7 million in 2014.

Despite these onerous commitments, the Rajapaksa government went in for Phase II of the project with a Chinese loan of US$ 818 million. It also gave China exclusive rights over four of the berths to be constructed in Phase II.

When there was a change of government following the January 8, 2015 Presidential election, the new dispensation led by President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe considered turning the port into a ship breaking yard. And now, the cabinet wants to build a naval dockyard there.