China Merchant Port Holdings Limited (CM Port) yesterday released the final tranche of US$ 584 million for the Hambantota Port, completing the US$ 976 million investment. This marks the single highest ever Foreign Direct Investment (FDI) received by Sri Lanka to date.
The cheque was handed over to the Chairman of Sri Lanka Ports Authority (SLPA) Dr. Parakrama Dissanayake by the Chief Representative of China Merchant Group in Sri Lanka - Ray Ren. This third final tranche of US$ 584,194,800 follows the first and second tranches released in December last year and January 2018, amounting to US$ 292 million and US$ 97 million.
In terms of the Concession Agreement, CM Port has agreed to deposit a further sum of US$ 146 million for port and marine related activities. The Sri Lanka Ports Authority (SLPA) and the Government entered into a Concession Agreement with China Merchant Port Holdings Limited of Hong Kong in July last year for the management, operation and development of Hambantota Port on a Public Private Partnership model.
The Port has been making heavy losses since its grand opening in 2010 under the Mahinda Rajapaksa regime. In December last year two Sri Lankan companies established under the concession agreement namely, Hambantota International Port Group (HIPG) and Hambantota International Port Services Co. (Pvt) Ltd. (HIPS) officially took over the Hambantota Port, thus making the concession agreement effective.
The two companies established in Hambantota plan to invest an additional US$ 400 million to US$ 600 million on phase I and II of the Hambantota Port. These investments are likely to attract many other foreign investors, making Sri Lanka a pivotal maritime and Logistics Centre. “CM Port is one of the most successful global companies in the ports sector, and their investment in the Port of Hambantota can be described as a credible vote of confidence in its potential as well as in the economy of Sri Lanka,” says Dissanayake.
During 2017, the Port of Colombo was ranked as the 23rd largest Container Port and 13th best connected Port in the world. The SLPA also recorded a Net Profit of Rs 13.2 Billion in 2017, as against a Net Profit of Rs 1 Billion achieved in 2016 .With transshipment volumes in the Port of Colombo during the first five months of 2018 as against 2017 increasing by 19.2% and Jaya Container Terminal managed by SLPA recording a transshipment growth of 21% during the period, the conclusion of the Concession Agreement of Hambantota Port would enhance the profitability of the SLPA,” he said.