Asian Public Private Partnerships

Hambantota Port is a strategic maritime hub facilitating trade, connectivity and economic growth. Government of Sri Lanka (GoSL) entered into a Public Private Partnership (PPP) with China Merchants Port Holdings Limited (CMPort) in January 2017 to restructure the Hambantota Port which was poorly managed.

Project Details

Stakeholders: GoSL, SLPA, HIPG, HIPS, CMPort
Date: January 2017
Industry: Maritime Shipping Naval Logistics Transportation Port
Project URL Text: hipg.lk

Government of Sri Lanka (GoSL) entered into a Public Private Partnership (PPP) with China Merchants Port Holdings Limited (CMPort) in January 2017 (Framework Agreement was signed) through a Special Purpose Vehicle (SPV) to restructure the Hambantota Port which was poorly managed to restructure the Hambantota Port on a PPP basis with a CMPort-led consortium on the basis of the terms in the Framework Agreement (FA). According to the submissions made to a Sri Lankan Parliament committee; the accumulated losses of Hambantota Port was LKR 46.7 billion (approximately $300 million) as of the end of 2016, just before the port was leased to CMPort. Hambantota International Port Group (HIPG) & Hambantota International Port Services (HIPS) are joint-venture companies with shares held by CMPort and Sri Lanka Ports Authority (SLPA) in a PPP. CMPort is a major conglomerate based in Hong Kong with a global presence in port operations, maritime transportation and logistics services. SLPA is a Statutory Authority established by an Act of Parliament with powers for management and administration of ports in Sri Lanka.

In August 2017 Sri Lanka’s cabinet of ministers took a decision to sign a concession agreement with CM Port to operate the Hambantota Port as a PPP project under which a 70% stake of the port is leased to CM Port. The remaining 30% of the stake is owned by the SLPA and the commercial operations of the port are handled by the CMPort and the SLPA jointly while the GoSL still owns the port. At the time of entering into the lease agreement; Hambantota Port was valued at $1.4 billion and CMPort invested $1.12 billion as per the terms of the agreement. It was agreed to made the fund transfers on a staggered basis with CMPort agreeing to pay $5 million upon signing of the FA, 10% in one month, 30% in three months and 60% in six months.

HIPG is the SPV for the PPP; a strategic development project between the GoSL and CMPort which is incorporated as a private limited liability company under the laws of Sri Lanka. HIPS has the exclusive rights in developing, managing and operating the common user facilities such as port control, piloting, mooring, anchorage, towage, security and QHSE (Quality, Health, Safety and Environment). HIPG and HIPS work together to ensure the efficient and reliable movement of goods and passengers; integrating environmental, social and economic sustainability initiatives into all areas of port operations. Hambantota Port operations have expanded since the PPP.

Hambantota Port - Sri Lanka