Precedent set for private sector:

Hambantota Port brings in returns

By Shirajiv Sirimane in Hambantota

The economic benefits which will be brought in by the Ruhunu Magampura Mahinda Rajapaksa International Port are meant not only for Hambantota, but for the entire region. It is one of the single biggest development projects in Sri Lanka that will take the country closer to its goal of becoming the Wonder of Asia even sooner than expected.

The investment the country made on the Ruhunu Port was US$ 360 million. The Sri Lanka Ports Authority (SLPA) has already secured investment proposals to the tune of over US$ 760 million, making the project bring in Return On Investments (ROI) to the country.

The harbour would create history when the companies in the investment zones start exporting sugar, fertiliser and cement to the Asian market with two Pakistan and Indian companies already doing value additions there.

Chairman SLPA, Dr. Priyath Wickrama said the Ruhunu Magampura Port would generate revenue of over one billion US dollars and over 2,000 employment opportunities within 24 months.

“One of the world’s biggest petrochemical plants would also open next year at the Port,” he said.

He said with their concept of a free port they opened out Hambantota to the world market and are quite satisfied with the response they are getting. “This port will prove to be a viable venture in three years as it would start making profits within the next three years. Usually new ports take around 10 to 12 years to reap in benefits,” Dr. Wickrama said.

One of the biggest advantages the Port offers to foreign parties is the saving of nearly three days’ sailing time and fuel. They will also enjoy a number of other benefits at Hambantota as it is a free port.

“Hambantota is the most suitable location to feed the Indian subcontinent,” he said. “A combination of Colombo and Hambantota will compete with Dubai, Salalah and Singapore,” he said.

Bunkering facilities

As Hambantota is to be listed among the busiest harbours of the world, it is envisaged that many of the 4,500 oil tankers would anchor at Hambantota for bunkering and ship repairing and also to purchase food, water, medical supplies as well as logistics in the near future.

Dragon Asia Fertiliser, with its local partner Hayleys PLC, created history at the Ruhunu Magampura Mahinda Rajapaksa International Port last week by becoming the first private enterprise to invest in the Port.

The joint venture will invest seven million US dollars for a fertiliser bagging storage and processing plant.

This landmark investment will result in the development of a local and international fertiliser transshipment and distribution hub of over 200,000 square feet in extent, in an area of 2.5 hectares.

Construction work on the facility, which received Cabinet approval in August this year, began with the laying of the foundation stone last week, amidst a gathering of senior Government officials and senior representatives from Hayleys and Dragon Asia Fertiliser.

“This facility, which has the potential to generate significant employment opportunities for Sri Lankans and to attract vessels to the Hambantota Port, represents an important development in the post-conflict infrastructure expansion in the country,” Hayleys Group Chairman Mohan Pandithage said.

“As a Group that has consistently supported development initiatives in Sri Lanka, Hayleys is proud to take the initiative in investing in the Magampura Port industrial zone, setting a precedent for other private sector entities to follow,” he said.

Fertiliser hub

Some of the constructions at the Port.

The oil tank farm complex.

Once operational, the state-of-the-art Hambantota International Fertiliser Distribution Hub hopes to attract major fertiliser shipments from the Baltic Sea region to the Port of Hambantota, by employing its strategic location to deliver freight advantages to buyers in terms of cost and time savings. Such cost advantages will in turn benefit the local agriculture industry, enabling the local farmers to thrive. The main area of business would be exports to the Asian region while around 15 percent of the production would be sold in Sri Lanka.

The project will be ready in eight months. “We at Hayleys hope to continuously support the development of the country in every way possible, and our voyage at Hambantota has only just begun,” the Hayleys Chairman said.

Established in 1878 and adjudged Sri Lanka’s Best Corporate Citizen four times, the Hayleys Group employs over 30,000 people, and accounts for 2.78 percent of the country’s export income.

Its joint venture partner Dragon Asia Fertiliser comprises an active group of companies covering some large fertiliser consuming markets, such as Bangladesh, Indonesia, Sri Lanka and Vietnam, and has been in operation since 1993. Ports and Highways Deputy Minister Rohitha Abeygunawardane said the Government does not have any shares in Hayleys and that the company has invested in the Hambantota Port due to its sheer economic value.

“This will also silence critics and help build investor confidence, opening out the harbour to international markets,” he added.

He said Peak Energy will invest US$ 434 million to operate one of the world’s biggest chemical plants in Hambantota while Thatta Cement of Pakistan has received Cabinet approval for a bagging plant to the value of US$ 15.6 million. The fourth investor is Renuka Sugar which will bring raw sugar from Brazil for refining and export. These projects will generate around 900 jobs.

New opportunities

Meanwhile, MP Namal Rajapaksa said that not only the Hambantota district, but surrounding areas have already been re-energised due to this project. “Benefits are already evident with many new opportunities being created in the transport, food and beverages and many other sectors,” he said.

Most importantly, the mindset of the people in the area which used to be negative, ‘looked down upon’ and ignored, has changed to a positive attitude with the international harbour, airport and other mega development projects. “Today, they have more money and their lifestyles are changing,” the MP said. Funds for the Hambantota Port project was received from the People’s Republic of China, following the successful diplomatic visit of President Mahinda Rajapaksa to China in 2007.

An oil tank farm with 14 tanks is also being constructed at the Hambantota Port with an investment of US$ 76 million. The farm consists of eight tanks for fuel bunkering for vessels, three tanks for aero fuel and three tanks for storing LP Gas. Meanwhile, the tallest building in the Southern Province, the Port administrative complex will open next year, bringing all operations of the Port under one roof. This 15-storey building will facilitate the administrative and engineering divisions of the Hambantota Port. Overlooking the Hambantota coastline, the building is situated inside the Port premises, within 500 metres from the docks.

Tanya and Suren Wickramasinghe are the architects of the project.

Pix: Sumanachandra Ariyawansa