China Merchants Port (CMPort) has taken over full operation at Sri Lanka’s Hambantota Port and paid out $292.1m as the first tranche of $973.7m it has agreed to pay for an 85% stake in the port, it said in a stock market announcement.
The company will invest a total of $1.12bn in what is expected to be a major element in its Belt and Road Initiative, with the remaining amount to come over the next few months. CMPort had earlier this year sealed an agreement for 99-year concession to operate the port.
In explaining the rationale for the move CMPort said: “The parties are of the view that it is in the interest of the parties to commence the relevant work in the Hambantota Port project at the earliest opportunity, and they expect that a higher proportion of the investment amount will be incurred during the earlier stages of the project.”
The early start of payments made possible by the amendment of the concession agreement will help the Sri Lankan government in meeting debt payments for the loss-making port.
According to local media reports, just 14 vessels called in 2016 and as at June this year, only 10 ships, apart from the car carriers which have been diverted from the main Colombo Port are discounted, have made port calls.