$ 300 million ADB loan for Colombo Port expansion project

The Government and the Asian Development Bank (ADB) signed a loan Agreement for US$ 300 million to develop the Colombo Port under the Colombo Port Expansion Project.

The total investment cost of the project is US $ 780 million of which US$ 480 million will be financed by the public sector and the balance US$ 300 million by the private sector. Of the public sector component the Asian Development Bank provides US$ 300 million and the Government of Sri Lanka contributes US$ 180 million. The balance amount of US$ 300 million will be borne by the private sector for the construction of the first container terminal under a concessionary Agreement.

The objective of the project is to promote the country's economic growth by improving the competitiveness of Sri Lanka in international trade through expansion of the Colombo Port using public-private partnership to maintain its status as a regional transshipment hub port.

The public sector finance will be utilised for construction of harbour infrastructure facilities. It includes construction of the breakwater, the dredging of approach channels and harbour basin, relocation of the submarine oil pipeline, construction of ancillary facilities as well as the provision of navigational aids. The construction of the first container terminal and procurement of associated handling equipment will be done through the private sector financing.

The Government will select the concessionaire for at least the first two terminal components through open competitive bidding.

The Sri Lanka Ports Authority (SLPA) will be the implementing agency for this project under the supervision of the Ministry of Ports and Aviation. The project will be completed by 2010.

Up to now, the Government has entered into loan and grant agreements to the value of US$ 719 million. Of these commitments, US$347 million from Japan for the implementation of Pro-poor rural development project, Greater Colombo Transport Development Project and Water Sector Development Project, US$ 17 million each from Spain and Germany, US$ 13 million from Austria, US$ 12 million from the Netherlands and US$ 12 million from UN agencies were received.

Total commitments expected from the ADB in the year 2007 is US$ 515 million. The Colombo Port Expansion Project is one of the projects that was earmarked under the ADB expected commitments.