ADB grants a $300 million loan for Sri Lanka Port expansion

The project will be implemented as a public private partnership project.

Mar 20, Colombo: Asian Development Bank today granted a $ 300 million loan to support the expansion of the Colombo Port. The funds will be used to substantially upgrade the facility.

Senior Transport Specialist with ADB’s South Asia Department, Prodyut Dutt said that Colombo Port, a natural transshipment hub for South Asia has lost market share in transshipment in recent years as the Port does not have the operating capacity or depth required to berth the latest generation container ships.

A statement issued by the ADB said the project will be implemented as a public private partnership project. The public sector will implement the common user harbor infrastructure works, such as dredging and breakwater construction sufficient to accommodate three new container terminals.

The private sector will develop and operate the container terminals which will be built sequentially. The Project will also help establish a new marine operations center, relocate an underwater oil pipeline and provide navigational aids, it added.

The John Keells Holdings Group, a major firm in Sri Lanka, is contributing $ 500 million to the Port expansion project.

The project when completed will increase the container-handling capacity from 3.3 million 20-foot containers in 2006 to 5.7 million by 2010 and eventually to 10.5 million.

ADB said the security measures have been incorporated into the project considering the current conflict situation. The project will promote Sri Lanka’s overall economic growth by improving its international competitiveness with lower transport costs and faster delivery times, ADB stated.

The $300 million loan for the project will come from ADB’s ordinary capital resources and be provided under the conditions of the London interbank offered rate-based lending facility. The loan, which will have a 25-year term and include a 5-year grace period, will be administered by the Sri Lanka Ports Authority under the supervision of the Ministry of Ports and Aviation.