The Hambantota Port, named after President Mahinda Rajapaksa, is proving to be a disaster. The Magampura Mahinda Rajapaksa Port (MMRP), opened two years ago with the aim of increasing the number of cargo ships berthing at the Port, and rejuvenating bunkering, which at this point in time has proved to be a failure.
The Port, originally designed as a service and industrial harbour, and built by obtaining a massive loan, at an exorbitant rate of interest from China remains deserted as vessels fail to call at the Port, as envisaged.
It is said that the MMRP, built on 1750 hectares of land in the Rajapaksa constituency at a massive cost of US$ 1,300 million, lies forlorn with occasional ships calling at its docks. The Port, which has the capacity to handle over 30 vessels at any given time has ships only occasionally dropping anchor. Sources say that ships dock at the MMRP because they are compelled to do so by the government in its endeavour to generate traffic at the new seaport.
Similar to Singapore Port
Moreover, its bunkering facility, which was built on the lines of Singapore’s mega Port, remains desolate for want of ships calling over at the Port. It is said that MMRP is able to feed 220,000 MT of fuel supply each year. Singapore’s hub Port lifts 30 million tonnes of bunker, annually, and is the most sought-after Port in Asia. It has around 130,000 ships calling at its port annually, and over one million visitors cruise into Singapore, every year.
The Opposition had from the inception, been critical of the project. They have questioned the need for a second Port for a country as small as Sri Lanka. The argument centred on the adequacy of the Colombo Port, which could efficiently handle all ships that call in the island. It is estimated that around 4,000 vessels call at the Colombo Port, annually.
United National Party (UNP) MP Ravi Karunanayake, commenting on the Hambantota Port said it is a colossal waste of public money. “This is an utter waste and a ‘duplication of capital expenditure,'” he charged, alleging that there are hardly any ships calling at the Port, and that in the 25 months since MMRP was opened, only 25 ships had called. “A shipment a month,” he quipped.
Karunanayake said the government had no logical reason to build the Port and recommended that the government cushion the country’s local industries first and promote trade indigenously so as to boost activities at the Port. “The government needs to solidify its business to boost its exports and imports,” he opined.
The Port of Colombo, despite its inadequate berthing facilities and lack of vehicular parking yards, is still considered a convenient Port. Ships coming into Sri Lanka, irrespective of the concessions granted at the MMRP, opt to call at the Colombo Port. “The climate is not conducive to berth vessels and foreign ships at the Hambantota Port; ships seem reluctant to berth and unload cargo there,” he said.
He maintains that the MMRP only serves to expend monies unnecessarily by maintaining the Port and the entire complex as there is hardly any traffic at the Port. Ships incur additional costs by docking at MMRP. Logistics too are cumbersome, a source revealed.
“Although the government has declared the Hambantota Port as a free port with no customs duties being imposed, and minimum regulations to facilitate ships calling at the Port, cost of transport from Colombo to the Port becomes an additional financial burden the importer has to incur. “Each importer has to spend around Rs 36,000 to transport his vehicle from the Port to Colombo,” Karunanayake added.
Critics say the MMRP will only serve as a dry dock. They add the Port can generate income if it is used as a dock to repair or build ships.
The MMRP was built by obtaining loans from the Exim Bank in China, in two installments. The first phase of the building was estimated at US$ 306 million, which was borrowed at an exorbitant 6.3% rate of interest. The second phase cost a massive US $ 800 million, also at the same rate of interest. Other expenses including the cost of blasting rocks cost US$ 202 million. The total cost according to the Sri Lanka Ports Authority (SLPA) is US$ 1,308 million. The loan has to be repaid in 11 years, in biannual instalments.
With no ships calling at the Port, the question that arises is how would Sri Lanka repay the massive loan it had obtained? The MMRP has to generate at least Rs 8 billion a year to pay its annual instalment of Rs 6 billion, thereby honouring its commitment to repay the loan. But with no business being generated, due mainly to ships not docking at the MMRP, sources said the burden is on the management of the Colombo Port to honour the financial commitments of the MMRP by generating sufficient funds to meet all costs. “The MMRP is a burden on the Colombo Port. The Colombo Port is paying back the capital and the interest on the monies borrowed,” Karunanayake said.
Meanwhile, vehicles importers are greatly inconvenienced by the move to redirect vehicular cargo to the MMRP. Although the Hambantota Port offers simplified clearing arrangements, ample parking areas, dedicated terminals and facilities to import cars into the country, importers say the cost of transporting the consignment to Colombo is very high. They added that car carriers are costly and an importer would incur around Rs 20,000 every time he has to travel to MMRP to clear the vehicles. “Although the port charges are low, the transport charges are exorbitant,” Chairman, Vehicles Importer Association of Sri Lanka, Dhammika Peires said.