COLOMBO (EconomyNext) – Capital repayments of Chinese loans taken to build Hambantota port in southern Sri Lanka start this month, greatly increasing the financial burden on the Sri Lanka Ports Authority, an official said.
SLPA Chairman Lakdas Panagoda said the authority was taking a fresh look at the building of a container terminal in the second phase of the port construction, given its lack of business and huge debt burden.
"At the moment we are already paying the first part of the loan back to the tune of 170 million rupees a month," he said.
"But that’s without capital. Capital payment comes into effect in April."
Panagoda said Hambantota port today costs the SLPA 240 million rupees a month, including loan interest and operating costs, which has to be paid for by profit from Colombo port.
Hambantota port has been criticised as a ‘white elephant’ for not having enough business more than two years after it was commissioned.
"Already we have taken one billion US dollars to build Hambantota port and its second phase is not complete. So you can understand why we have to think hard about how we are to do the rest of the operation," he said in an interview.
"We have a huge debt in Hambantota. So we need to take stock and see how far we can go with the second phase," Panagoda said. "We need to think hard how we are going to do the rest of the port. We have to start earning revenue from the port."
Last year China Merchant Holdings International, which already operates a container terminal it built in Colombo, began building a container terminal in Hambantota on what was described as a ‘supply operate and transfer’ basis.
Panagoda said the SLPA was re-assessing the container terminal project, although it had not been stopped.
"This contract we are looking at carefully. There are some complications."