The Chinese-financed $360 million Phase I of the mega port in Hambantota in south Sri Lanka is expected to be completed in November, five months ahead of schedule.
Lying on the main sea route and with a draft of 17 m, Hambantota will be the deepest port in the Indian subcontinental region. It is meant to grow to be a "hub port", offering a variety of services to attract 10,000 ships a year.But, experts point out that the depth of the harbour and the location of the port are not the only criteria to determine the viability of a port.
"Hubs cannot be decreed into existence. Hubs emerge because the economics are right, and they disappear when the economics go wrong," says Rohan Samarajiva of the think tank, LIRNEasia, in Lanka business Online.
Noting that Hambantota is meant to first handle bulk cargo, the expert says that unless the volumes of such cargo are sufficiently high, the port may not earn enough to help repay the "not so cheap" Chinese loan.
Lack of income may lead to the government forcing shippers to shift container handling from Colombo port to Hambantota. But, the shippers may be reluctant to do so if it does not make business sense, and rail and road links remain as primitive as they are today.
There could also be a move to shift transhipment operations from Colombo to the new port. But it is not always possible to shift containers meant for transhipment from those that are not, and shippers may continue to prefer Colombo, he warns. "Lanka does not benefit by shifting business from Colombo to Hambantota. The national economy benefits only if Hambantota generates new business," he asserts.
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