Project ID: 33256

China Eximbank provides $306.7 million buyer’s credit loan for Phase I of Hambantota Port Development Project (Linked to Project ID#33409 and ID#85184)

Commitment amount

$ 551882491.3630942

Adjusted commitment amount

$ 551882491.36

Constant 2021 USD


Funding agency [Type]

Export-Import Bank of China (China Eximbank) [State-owned Policy Bank]


Sri Lanka


Transport and storage (Code: 210)

Flow type


Level of public liability

Central government debt

Financial distress






Mixed (The next section lists the possible statuses.)





Financial Flow Classification

OOF-like (The next section lists the possible statuses.)

Official Development Assistance

Other Official Flows

Vague (Official Finance)

Flows categorized based on OECD-DAC guidelines

Project lifecycle


Completion (The next section lists the possible statuses.)










Actual start


Actual complete




On December 30, 2007, the Export-Import Bank of China and the Government of Sri Lanka signed a $306,726,736 buyer’s credit loan (BCL) agreement [BLA0704] for Phase I of the Hambantota Port Development Project. The original borrowing terms of the BCL (captured via Project ID#33256) are as follows: an interest rate of 6-month LIBOR plus a 0.75% margin, a 15 year maturity, a 4 year grace period, and a 6% Sinosure insurance premium (exposure fee) that was to be paid in two equal installments within two years of the loan agreement signature date. The BCL agreement also specifies that 'in case of arrears on interest payments, the borrower is expected to pay interest on those arrears at an annualized rate equivalent to the interest rate on the respective loan. In case of arrears on interest and principal, then the borrower is expected to pay interest on those arrears at an annualized rate equivalent to the interest rate on the respective loan plus one percent.' The Government of Sri Lanka on-lent the proceeds of the BCL to Sri Lanka Ports Authority (SLPA), the state-owned operator of major commercial ports in Sri Lanka. China Eximbank disbursed an unknown amount in 2007, an unknown amount in 2008, $153,430,619.03 (Rs. 17,634,548,199) in 2009, $114,859,550.41 (Rs. 12,987,651,775) in 2010, $2,929,597.02 (Rs. 323,888,923) in 2011, and $31,944,655.03 in 2012. The loan's amount outstanding was $248,349,992.17 (Rs. 32,073,358,419) as of December 31, 2013, $223,073,990 as of December 31, 2016 and $69,710,622 as of June 30, 2022. At the time the loan was contracted, its all-in interest rate was 5.234%. However, at the beginning of the project implementation period, LIBOR increased, pushing up the all-in interest rate to 6.5%. The Government of Sri Lanka and China Eximbank restructured the BCL agreement in October 2008, replacing the loan’s variable interest rate with a fixed interest rate of 6.3% (as captured via Project ID#85184). Phase I of the Hambantota Port Development Project involved the construction of two breakwaters (312m long eastern b/w and 988m long western b/w), a 17m deep harbor basin, a 210m wide entrance channel, a service berth, a 100,000DWT general purpose berth, a 100,000 DWT oil berth, and various roads and buildings (including an administrative building, a public service building and utility buildings). China Harbor Engineering Co. and Sinohydro were the contractors responsible for project implementation. Construction of the port commenced on January 15, 2008. The first phase of the port was ceremonially opened on November 18, 2010, with the berthing of the naval ship ‘Jetliner’ at the port facilities. November 18, 2010 also marked the date of the President’s birthday and the beginning of Phase II of the Hambantota Port Development Project (HPDP). However, the project was not officially completed until October 30, 2011. Phases I and II of HPDP have encountered financial management problems and corruption allegations. Hambantota Port generated lower-than-expected container traffic and proved to be commercially nonviable under SLPA ownership. Consequently, SLPA could not service its loans to China Eximbank. In response, China Merchants Port Holdings Company Limited (CMPort) — a subsidiary of China Merchants Group (a Chinese state-owned enterprise) — purchased a majority ownership stake in the port and the right to operate and develop it for 99 years. More specifically, on July 29, 2017, China Merchants Port Holdings Company Limited (CMPort), a subsidiary of China Merchants Group, and Sri Lanka Port Authority (SLPA) signed a 99-year concession agreement and formed a joint venture to operate Hambantota Port. According to the terms of the joint venture agreement, CMPort acquired an 85% stake in Hambantota International Ports Group (HIPG) and a 49.3% stake in Hambantota International Port Services (HIPS), representing about 70% of the total equity. CMPort was also granted the operating and management rights of HIPG and HIPS as well as the lease and development rights of approximately 11.5 square kilometers of land in the Hambantota port area. CMPort agreed to make a total equity investment of $1.12 billion, of which $974 million would be used to acquire the 85% stake in HIPG and $146 million would be deposited into a bank account in the name of CMPort in Sri Lanka (for the expansion of Hambantota Port and shipping-related business). According to a July 20, 2017 Cabinet Memorandum entitled ‘Hambantota Port Concession Agreement’ (No. MPS/SEC/2017/32) that was approved by Sri Lanka’s Cabinet on August 4, 2017, when the concession agreement was signed, responsibility for repayment of the China Eximbank loans that were contracted for the construction of Hambantota Port was transferred from SLPA to the General Treasury. Given that the General Treasury was also identified of the recipient of the $974 million cash infusion from CMPort, many media outlets and commentators reported that the arrangement represented a debt-for-equity swap. Another source of controversy arose in June 2018 when the New York Times reported that $7.6 million had been transferred from a Standard Chartered Bank account controlled by China Harbor Engineering Co. (labelled ‘HPDP Phase 2’) to affiliates of President Rajapaksa’s re-election campaign. The New York Times also reported that checks worth $1.2 million (linked to the ‘HPDP Phase 2’ bank account) were delivered to President Rajapaksa’s official residence.

Additional details

1. The Government of Sri Lanka loan key number is 2007044. 2. AidData has estimated the loan's all-in interest rate (at the time that it was contracted) by adding 0.75% to average 6-month LIBOR in December 2007 (4.484%). 3. In 2013, China Eximbank issued an additional RMB 960 million concessional loan for Hambantota Port Development Phase I for Ancillary Works and Supply of Equipment (as captured via Project ID#33409). It also provided a $65 million loan for the bunkering terminal (as captured via Project ID#33329) and two loans for Phase II of the Hambantota Port Development Project (as captured via Project ID#39023 and Project ID#39024).

Number of official sources


Number of total sources


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Direct receiving agencies [Type]

Government of Sri Lanka [Government Agency]

Indirect receiving agencies [Type]

Sri Lanka Ports Authority (SPLA) [State-owned Company]

Implementing agencies [Type]

China Harbour Engineering Co., Ltd. [State-owned Company]

Sinohydro Corporation Ltd. [State-owned Company]

Insurance provider [Type]

China Export & Credit Insurance Corporation (Sinosure) [State-owned Company]

Loan Details


15 years

Interest rate


Grace period

4 years

Grant element (OECD Grant-Equiv)


Bilateral loan

Export buyer's credit

Investment project loan