Think tank says Hambantota Port a failed OBOR project

The Hambantota Port turned out to be a failed project under China’s One Belt One Road (OBOR) initiative, a National Security Think Tank established under the Ministry of Defence in Sri Lanka, said.

The Institute of National Security Studies in Sri Lanka said that one reason as to why the OBOR project of developing a port in Hambantota had a negative impact on Sri Lanka was because it failed to provide a return on the investment.

Sanoj Jayakody, a Research Assistant (Intern) at the Institute of National Security Studies said that after Mahinda Rajapaksa was elected President of Sri Lanka in 2005, he looked to develop his rural southern constituency of the Hambantota district and building an international port for commercial ships was one way he planned to achieve this.

To construct the first stage of the port, Sri Lanka borrowed 307 million USD from China at a commercial interest of 6.3% annually.

Analysts such as Jonathan Hillman of CSIS and Eva Grey of Ship Technology point out that the loans came with relatively high rates of commercial interest.

This is especially compared to how most development banks offer loans with interest rates of around 2-3%, or even less. The analysts argue that the Chinese terms of high interest were reflective of a lack of competing bids.

The lack of competing bids was because other entities did not believe that lending money for the Sri Lankan Government to construct a port in Hambantota was economically viable.

This was partly because the existing Colombo Port, which is used by all international ships berthing in Sri Lanka, is currently underutilized.

It is predicted that traffic at the Colombo port will grow tenfold between 2016 and 2040.

“Indeed, the Colombo Port already offered many of the services Rajapaksa was planning to offer at the Hambantota Port. As analysts like David Brewster argue, international ships have no intention of stopping at Hambantota when the already established “excellent” port of Colombo was nearby,” Sanoj Jayakody said.

He said that after opening in 2010, the Hambantota port performed dismally and during the first two years, no large ship could dock at the port due to the presence of a large rock on the seabed.

To remove the rock, the Sri Lankan government had to borrow another 40 million USD from the Chinese government.

Finally, even after the port was fully open for business in 2012, barely any ships arrived. For example, in 2012, just 34 of the estimated 50-60 000 ships that annually pass near Sri Lanka’s southern tip actually docked at the Hambantota port.

By 2016, business was so low that the port was making an annual profit of just $1.81 million USD. Far from making Hambantota a megapolis, the port’s dismal performance made it difficult for Sri Lanka to even pay back the debt it had accrued.

Sanoj Jayakody said that the Chinese loan for the Hambantota Port therefore strengthens the case for China’s engagement in debt trap diplomacy.

He said that even if the Hambantota port becomes a regional hub at some point in the future, Sri Lanka will be far from the primary benefactor. Additionally, in the short term, China’s acquisition of the port has triggered regional tensions with India. (Colombo Gazette)


  1. Who says that it was failed Project for Mahinda?. He made billions of Rupees It was a successful financial for his family and made him the Political king of Ruhuna it is commonsense that all ships that come to Colombo and travel via Hambantota to East. Then why this Harbor needed ?. It could have been fishing Harbor. This proves that Politicians have no common sense. KKS project will be successful if Sedhu Samutra project is implemented

  2. Is it a think tank, or he was bribed by the West and India to undermine China’s credibility? We all know that South Asia is well known for selling their own people and their motherland for bribes or for refugee status.


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