China Eximbank provides $600 million preferential buyer’s credit for Phase II of Hambantota Port Development Project (Linked to Project ID#33481, #39024 and #39025)
Constant 2017 USD
Funding agency [Type]
Export-Import Bank of China [State-owned Policy Bank]
Transport and storage (Code: 210)
Export Buyer's Credit
On September 17, 2012, China Eximbank signed three loan agreements with Sri Lanka Ports Authority (SLPA) for Phase II of the Hambantota Port Development Project: a $51 million China Eximbank buyer’s credit loan (BCL), a $600 million China Eximbank preferential buyer’s credit (PBC), and an RMB 1 billion China Eximbank government concessional loan (GCL). SLPA is the state-owned operator of major commercial ports in Sri Lanka. The BCL carried the following terms: an interest rate of 6-month Libor + a 4% margin, 15 year maturity, 4 year grace period, 0.7% commitment fee, and a 0.9% management fee. The PBC carried the following terms: 2% interest rate, 20 year maturity, 7 year grace period, 0.5% commitment fee, and 0.5% management fee. The GCL (worth $158,358,086) carried the following terms: 2% interest rate, 20 year maturity, 7 year grace period, 0.5% commitment fee, and 0.5% management fee. However, the face value of the GCL was eventually reduced by RMB 300 million (to RMB 700 million). The BCL is recorded in Project ID#39025. The PBC is recorded in Project ID#39023 (this project). The GCL [China Eximbank GCL no. 2012(22) Total No 424] is recorded in Project ID#39024. Phase II of the Hambantota Port Development Project envisaged the construction of a large industrial area and a shipyard facility and required the acquisition of 1,500 hectares of land. It involved the construction of a quay wall (2140 m long) to accommodate 6 container berths, oil terminal (300 meters long), yard & roads, a flyover bridge, deepening of entrance channel (450 m wide, 840 m long, 18 meter deep), 2 feeder berths, construction of an artificial island (50 Ha) & handling facilities, and excavating a new basin area. Upon completion, it was envisaged that the port in Hambantota, deeper than the one at Colombo, would be used as a refueling and docking station for the Sri Lankan Navy. The contractors responsible for project implementation were China Communications Construction Company and China Harbour Engineering Com. Ltd. Phase II of Hambantota Port Development Project was formally launched on November 18, 2010. However, construction did not begin until September 2012. The project was originally slated for completion in November 2015. However, the project encountered various delays and problems. As of December 31, 2017, the project had achieved 96% physical completion rate. A formal port handover ceremony took place on December 11, 2017. Hambantota port ultimately proved to be commercially nonviable under host country ownership, and the Sri Lankan government could not service its loans to China Eximbank. China Merchant Port Holdings (CMPH) — a Chinese state-owned enterprise — eventually offered to effectively convert the debt into equity by providing a cash payment of US$1.1 billion to SLPA in exchange for an 85 percent ownership stake in the port and the right to operate and develop it for 99 years. CMPH therefore absorbed the risk of managing a stranded asset that would have otherwise been borne by the Sri Lankan government. SLPA finalized it concession agreement with CMPH on July 29, 2017.
Multiple sources refer to a $808 million or $809 million China Eximbank loan for the Phase II of the Hambantota Port Development Project. These values are roughly equivalent to the combined value of the BCL, PBC, and GCL. Some sources also identify the maturities and grace periods of the GCL and PBC as 19 years (rather than 20 years) and 6 years (rather than 7 years), respectively.
Number of official sources
Number of unofficial sources
Receiving agencies [Type]
Sri Lanka Ports Authority [Government Agency]
Implementing agencies [Type]
China Communications Construction Co., Ltd. (CCCC) [State-owned Company]; China Harbour Engineering Co., Ltd. [State-owned Company]; Government of Sri Lanka [Government Agency]; Sri Lanka Ports Authority [Government Agency]; TBEA Co., Ltd. [Private Sector]