Port problems

BEDROCK at the Hambantota Port has caused a rocky situation with an additional Rs.15.9 billion having to be spent to complete the project.

According to a newspaper report this shocking amount will include the bedrock blasting that will be needed for the port to reach a depth of 17m, which will be one metre less than the Colombo Port. It is rather interesting to note that even though the government presented the Hambantota port as being necessary to attract large ships that cannot be accommodated in the Colombo port its depth will be less.

The newspaper reported the Rs. 15.9 billion is equivalent to meeting the Government’s Samurdhi welfare bill, for a period of six months, which begs the question what other useful things the money could have been used for.

The additional costs are for blasting and removing the bedrock found in the harbour which would cost US$ 45 million (Rs. 4.8 billion); another US$ 82 million (Rs. 8.9 billion) for escalating costs of raw material, a further US$ 9.25 million (Rs. 999 million) to build a head office building in the port premises, an additional US$ 6.8 million for the change in breakwater design works and another US$ 16.90 million for the purchase of port equipment.

The capital cost of phase one of the Hambantota Port project originally estimated at US$ 360 million will now go up by 41% or US$ 148 million (Rs. 15.9 billion) to US$ 508 million as a result of this additional work. The second phase of the project, also funded by China’s Exim Bank under the same conditions will cost the taxpayer another US$ 800 million. No counterpart funding by GoSL is needed.

However, due to the aforesaid escalating costs, the original capital costs of both phase one and two of the project originally estimated at US$ 1,260 million; will now go up by 11.7% (US$ 148 million) to US$ 1,408 million.  

It is interesting to note that the issue of bedrock had been highlighted in two previous feasibility reports. It was first discovered by a consultancy firm called SNC Lavalin of Canada which did a feasibility study on a Canadian grant during President Chandrika Bandaranaike Kumaratunga’s regime (1994-2001). Afterwards another feasibility study at a cost of US$ 2 million was executed by Ramboll of Denmark, another consultancy firm, when President Mahinda Rajapaksa was Minister of Ports and Fisheries during the tail end of the Kumaratunga regime. That cost was borne by the Ports Authority but the bedrock problem was never addressed with transparency.

It is obvious that since the port construction is as much a political issue as an economic one many of the unsavoury aspects would have been swept under the carpet until it was too late. It is disappointing that the government still cannot manage its projects in a realistic manner and understand that the costs can have a deep effect on the people who are struggling to meet their daily needs.  

Large scale infrastructure projects are necessary for development. However, they must be decided on pragmatically and managed as realistic goals. Keeping aside such a massive cost and adding it on later decreases the credibility of the government and deceives the public who ultimately pay for the project.