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H’tota Port – An Additional Rs.15.9 Billion Fiasco

Apr 14, 2011 3:25:19 PM - thesundayleader.lk
  • Bedrock Blasting Not Included In Original Hambantota Port Bill
  • Public To Be Burdened With An Additional Cost Of Rs 15.9 Billion

By Paneetha Ameresekere

The public will have to cough up an additional Rs. 15.9 billion as new capital costs involved in blasting the bedrock at the Hambantota Port to obtain the required 17 metre draft to accommodate mega container carriers, Ports Authority Chairman, Dr. Priyath Bandu Wickrama told The Sunday Leader in an email interview.
Rs. 15.9 billion is equivalent to meeting the Government’s Samurdhi welfare bill, the handout or food stamp package given to the country’s poor, for a period of six months.
The additional costs are for blasting and removing the bedrock found in the harbour which would cost US$ 45 million (Rs. 4.8 billion); another US$ 82 million (Rs. 8.9 billion) for escalating costs of raw material, a further US$ 9.25 million (Rs. 999 million) to build a head office building in the port premises, an additional US$ 6.8 million for the change in breakwater design works and another US$ 16.90 million for the purchase of port equipment.
The capital cost of phase one of the Hambantota Port project originally estimated at US$ 360 million will now go up by 41% or US$ 148 million (Rs. 15.9 billion) to US$ 508 million as a result of these additional works.
He said that the original US$ 360 million costing was worked out on the basis that US$ 306 million of those expenses being met by China’s Exim Bank at an interest payment of 6.3% and payable over 11 years with the balance chipped in by the government.
The second phase of the project, also funded by China’s Exim Bank under the same conditions will cost the taxpayer another US$ 800 million. No counterpart funding by GoSL is needed.
However, due to the aforesaid escalating costs, the original capital costs of both phase one and two of the project originally estimated at US$ 1,260 million; will now go up by 11.7% (US$ 148 million) to US$ 1,408 million.
He also said that this bedrock found at a depth of seven metres at Karaganlevaya on which the Port is being built, is not a new discovery.
It was first discovered by a consultancy firm called SNC Lavalin of Canada which did a feasibility study on a Canadian grant during President Chandrika Bandaranaike Kumaratunga’s regime (1994-2001). Afterwards another feasibility study at a cost of US$ 2 million was executed by Ramboll of Denmark, another consultancy firm, when President Mahinda Rajapaksa was Minister of Ports and Fisheries during the tail end of that aforesaid Kumaratunga regime. That cost was borne by the Ports Authority.
The width of the Hambantota harbour is 800 metres and its length is 700 metres. The length of the entrance channel is 1,000 metres. The old Matara-Kataragama road was submerged to accommodate this new entrance channel.
The draft at the new Colombo South Port with ADB aid will be 18 metres in depth, one metre more than the proposed Hambantota Port draft.
The Chairman added that the draft at the existing Colombo Port is 15 metres; which accommodates both the privately run SAGT terminal as well as the state owned Jaya container terminal. (See page 8 for full interview)