Sri Lanka opened a $500 million container terminal at Colombo Port today, the biggest investment in the island’s harbours, as the nation seeks to upgrade its infrastructure with Chinese help.
The terminal, built and operated by China Merchants Holdings International Co. (144), will handle 2.4 million containers a year and boost Colombo’s capacity by almost half, according to the Sri Lanka Ports Authority. President Mahinda Rajapaksa inaugurated the facility.
The new terminal is part of Sri Lanka’s plan to add 7.2 million boxes of capacity and deeper berths at its main port to attract larger vessels. As Rajapaksa seeks investments after the end of a three-decade civil war, China is tightening its embrace of the island by committing at least $3.7 billion since 2005 to help expand ports to power generation.
“Sri Lanka has been looking toward China because of the availability of funding,” said Dushni Weerakoon, deputy director at the Institute of Policy Studies in Colombo. “With Sri Lanka’s plans to create a hub concept, expansion of the Colombo port makes good economic sense.”
The Export-Import Bank of China has funded investment projects including Sri Lanka’s first four-lane expressway, second international airport and a port in Hambantota city. Japan and India are also seeking closer ties with Sri Lanka as the island lies on the main shipping lanes connecting the Far East, West Asia, Africa and Europe.
The Ports Authority is also building another container terminal with an annual capacity to handle 2.4 million boxes at the Colombo port, which will be ready for operations early next year, Chairman Priyath Wickrama said today.
Colombo’s three other terminals had the capacity to handle 5 million 20-foot equivalent units. China Development Bank provided a $350 million loan to China Merchants in May 2012 for the company’s terminal, in which the Hong Kong-based port operator holds an 85 percent stake. State-run Sri Lanka Ports Authority owns the balance.
Sri Lanka’s port developments have helped attract $2 billion worth related private investments, Wickrama said.
The Asian Development Bank will promote more public-private infrastructure projects in Sri Lanka, said Zhao Xiaoyu, a vice-president at the Manila-based lender. The ADB earlier provided a $300 million loan for the construction of breakwater infrastructure for the Colombo port expansion.
Sri Lanka is seeking economic growth of 7.5 percent this year, after its expansion cooled to 6.4 percent in 2012 as a faltering global economy sapped demand for the nation’s tea and textiles. The country is experiencing a resurgence in tourism after the nation’s armed forces defeated separatist rebels in May 2009.