Sri Lanka’s Hambantota International Port — Gateway to the sub-continent
HIP is the latest addition to Sri Lanka’s network of harbours, currently being developed in different parts of the island. The expansion is an initiative of the Sri Lanka Ports Authority (SLPA), to take advantage of the nation's geographic positioning and the growing demand for more capacity in the region. Situated on the southern part of the island, HIP is amultipurposeport, 16 nautical miles from the main sea lane connecting east and west, ideally positioned to become the gateway to the sub-continent.
The port is operated by Hambantota International Port Group (HIPG) and Hambantota International Port Services (HIPS), two companies formed under the Public Private Partnership entered into between SLPA and global port operator CMPort. One year after HIP came under its new management, the port doubled its ro-robusiness, with a 136% increase in the volume of ro-ro vessels handled. The port has since diversified its services to include other port-related activities such as container handling, general cargo, passenger, bunkering, bulk terminal, gas and project cargo. HIPG has signed TSA’s with several leading shipping lines and is well on the way to becoming one of a kind in Sri Lanka.
The geographic positioning of HIP provides advantages not just for the shipping industry but for import/export business in general as the port can offer comparatively shorter timelines coupled with experienced handling to ship or transship finished goods to almost any destination in the region. Competitive labour costs, door to door delivery, attractive concessions and freeport facilities, ample space for storage, coupled with dry weather throughout the year, are among the benefits that give HIP its competitive edge as a maritime and logistics hub.
Logistical activities involving ro-ro operations and other port related services, targeting the African and South American vehicle markets, are also being further diversified, which will provide a platform for logistics service providers that will have access to the vast number of vessels passing by the port daily.
Part of the management’s strategy for gaining lead position in South Asia was to set the stage for HIP to become an energy hub. The company has already embarked on this ambitious plan by entering into an agreement with one of the world’s largest bunker providers, Sinopec Fuel Oils Company, to supply bunkering facilities to ships calling at the port, as well as vessels moving on the main sea lanes adjacent to the port. HIPG is positioning the Hambantota Port as a source of IMO-compliant fuel for the region. Located between Singapore and Fujairah – the world's number one and two bunker suppliers to the world respectively – Sri Lanka is well placed to take full advantage of the potential bunkering business has to offer.
Ray Ren, CEO of HIPG, says the port will begin its bunkering operations in 4Q19. “I am pleased to announce that HIP will be the first port in the region to supply IMO-compliant low sulphur fuel, which we will start doing by the end of this year. With the cap on low sulphur fuel in compliance with the IMO 2020 rule, the demand for it is bound to increase next year and we are very well prepared to take advantage of that. We will also cooperate with trade dealers to maximise economies of scale so that we can offer the best possible price advantage to our customers.”
The CEO says HIPG will be taking steps to expand the port’s tank capacity, to be ready for the imminent changes in marine fuel markets.
Another HIPG future strategy is to bring in refineries with capability of building their own facilities, which will create opportunity for local marine fuel production. Apart from minimising its own investment considerably, this strategy will allow the port to offer high grade fuel at considerably lower rates.
HIPG is also focused on further developing facilities for LPG handling, for which it intends partnering with local companies. Whilst this would vastly benefit LPG users in Sr Lanka, it would enable the port to become a distributor of LPG to the region. HIPG’s agreement to provide port facilities to Laugfs, a major player in Sri Lanka’s energy industry, is a step in this direction. The port has dedicated two jetties for oil, gas and petroleum business to facilitate energy companies like Laugfs which plans on bringing LPG in larger vessels from international markets.
LNG bunkering facilities are another focus area for HIPG; the company is in the process of negotiating with possible partners to provide this service.
HIPG has already taken on the task of building infrastructure for an industrial zone within the port to develop related industries in the form of greenfield investment. Amongst the facilities HIP would offer are bonded warehousing for related businesses, ship repairs/urgent ship services inside the port by providing sheltered piers etc. In addition to transshipment facilities, HIP will also provide services such as ship to ship transfer and layups.
A detailed business plan is in place for the development of the 3.5 square kilometres allotted to HIP for port related industries and HIPG is looking at core industries such as the manufacture of building materials, consumables, automobiles, home appliances and fertilizer.
The port’s Bulk Terminal Operating System is another first for Sri Lanka and should vastly improve levels of service delivery and efficiency. HIP’s capacity to handle considerable throughput volumes is a plus for industries setting up operations within the port premises, especially since it is slated to become the centre for the distribution of oil, gas and other commodities to South Asian/Middle Eastern, South East Asian and European markets. All these services are being introduced in planned phases and the port has already commissioned Atkins Limited UK, a firm specialised in designing globally renowned ports, to fast track the port’s master plan.