The Truth about Hambantota Port: Debunking the China ‘Debt Trap’ Narrative

 

Hambantota Port has been wrongly portrayed as a symbol of China’s “debt trap diplomacy.” In truth, it was a strategic infrastructure investment, misrepresented by local and foreign actors with geopolitical agendas. Here are the facts.

Hambantota Port: A Factual Q&A

 

Historical Maritime Significance

• The name“Hambantota” is believed to derive from “Sampan-thota,” meaning port of sampans—for small trading boats historically used by Chinese and Southeast Asian maritime traders.
• The area has been along-standing maritime hub, with active trade links predating European colonial rule and extending across the Indian Ocean trade routes.

 

Origins of the Project

• Hambantota was a long-held dream of the southern region.
• The project was championed by President Mahinda Rajapaksaand formally initiated in 2007, aligning with his broader vision for national infrastructure development.
• India was offered the project first in 2005 but declined.

 

What is the strategic value of Hambantota Port?

• Located just 10 nautical miles from a major east-west shipping lane traversed by over 31,000 ships annually.
• Designed to complement Colombo Port, focusing on:
  • Roll-on/Roll-off (Ro-Ro) vehicle transshipment.
  • Bunkering and energy services.
  • Bulk and break-bulk cargo.

 

Why was it initially called a failure?

• Funded by China’s Exim Bank (around 6.3%)
• Lack of a commercial business strategy.
• The broader “troika” vision of integrating port, airport, and industrial zone remained unrealized.

 

Was the lease to China a debt trap?

 

No.

The lease was not a debt-for-equity swap but a commercial lease agreement. It was initiated by the Sri Lankan government—not China—as a way to raise $1.12 billion in cash to service other debts.

The port remains under Sri Lankan sovereignty, with the Navy in charge of security. China’s role is purely commercial, conducted through China Merchants Port Holdings

 

Key facts debunk the myth:

• The lease was proposed by Sri Lanka—not China.
• Lease yielded $1.12 billion in cash, used to bolster foreign reserves and pay other international debt.
• The deal was not a debt-for-equity swap.
• Sri Lanka retains full sovereignty; the Sri Lanka Navy maintains control of port security
• It is a commercial port only.

 

What are the port’s achievements post-lease?

Under China Merchants Port Holdings (CMPort), Hambantota has:

• Specialized in Ro-Ro, bulk cargo, and bunkering.
• Attracted industrial investment, reviving the “troika” model.
• Achieved operational profitability.
• Created thousands of jobs locally.

 

Hambantota Port – Key Operational Statistics (2023–early 2024)

 

1. Vehicle Transshipment (Roll-on/Roll-off or Ro-Ro)

• 2023 Total Vehicles Handled: Over730,000 units
• Hambantota ranked among thetop 10 vehicle transshipment hubs in Asia.
• Major clients:Kia, Hyundai, Toyota, Tata, Mahindra, Nissan, Volkswagen.

2. Container Throughput (TEUs)

• Though still growing, Hambantota handledover 150,000 TEUs in 2023 (a 35% year-on-year increase).
• Projected to cross300,000 TEUs by end-2025 with new capacity investments.

 

3. Bulk Cargo

• Growth inimports & transshipment of cement, fertilizer, clinker, and petroleum
• Handles LPG, dry bulk (coal, clinker), and liquid cargo.

 

4. Infrastructure

• 11 berths, including:
  • Ro-Ro terminals
  • General cargo terminals
  • Liquid bulk terminals
• Managed byHambantota International Port Group (HIPG), a joint venture between China Merchants Port (85%) and Sri Lanka Ports Authority (15%).

 

 

Hambantota Port Income: Hypothetical vs Actual Performance

 

1. Hypothetical Earnings Without Leasing (Sri Lanka runs port alone):

• Assumption:Sri Lanka retained full control and funded development through loans or state funds.
• Reality:Before leasing, the port saw extremely low traffic:
  • Less than200 ships per year compared to 5,000+ at Colombo Port.
  • Annual revenue was under $1 million, while annual operating losses reportedly reached $10–12 milliondue to low throughput and debt-servicing costs.
  • Throughput averaged less than 200 ships per year—minuscule compared to over 5,000 at Colombo Port.

 

• Challenges:Sri Lanka lacked:
  • Expertise in port marketing and global shipping networks.
  • Ability to drive transshipment traffic independently.
  • Capital to modernize the port for commercial viability.

 

2. Current Model (Post-China Lease to CMPort):

• Lease Deal (2017):$1.12 billion paid to Sri Lanka (used to settle urgent foreign debt).
• Operator:China Merchants Port (85% stake), SLPA (15%).
• Progress:
  • Over2,000 ships per year as of recent data.
  • Expansion into logistics, energy, and industrial zones underway.
  • Long-term projected hub for Indian Ocean transshipment and energy.
• Sri Lanka’s Revenue:
  • SLPA receives ashare of port-related income (undisclosed in public domain), plus employment and tax benefits.
  • Also retainedsovereignty and security control.

 

Had Sri Lanka retained full control, Hambantota would likely have remained a white elephant —draining national finances with minimal return.

 

The China lease enabled:

• Capital infusion
• Operational efficiency
• Growth in cargo volumes
• Strategic use of a once-idle asset

Thus, if Sri Lanka had held onto Hambantota without leasing it, the port would have remained a loss-making monument to debt. The lease arrangement brought in over $1 billion in urgently needed foreign exchange, but transformed a dormant facility into a growing logistics hub— something unlikely to have been achieved under Sri Lanka’s fragmented political environment, where infrastructure projects often became politicized instead of being prioritized – and strategic infrastructure often falls victim to short-term politicking rather than long-term national planning.

 

Port Achievements (2020–2023): From White Elephant to South Asia’s Maritime Powerhouse

 

Strategic Location:

• Positioned on the world’s busiest East–West maritime trade route.

 

Maritime Growth:

• Over 2,000 ship arrivals in 2023 — a 30%+ increase from 2020.
• Now the largest vehicle transshipment hub in South Asia, handling major global auto brands.

 

Local Economy:

• Thousands of new jobs created in logistics, port services, and support industries.
• Dedicated industrial zone now drawing increased FDI and regional trade interest.

Revenue Growth:

• Port revenue surged 81% from 2020 to 2023, marking a dramatic financial turnaround

 

Sovereignty Maintained:

• Sri Lankan Navy retains full security oversight.
• No military presence or strategic control ceded to any foreign power.

 

Sri Lanka’s Debt Reality

• Less than 10% of Sri Lanka’s total external debt is owed to China.
• Majority lies with Western bondholders and multilateral lenders like the IMF and World Bank.
• Sri Lanka never defaulted on the Hambantota loan.

 

Who Spread the “Debt Trap” Narrative?

 

• Politicians:Harsha de Silva, Eran Wickramaratne, Ranil Wickremesinghe, Mangala Samaraweera, Anura Kumara Dissanayake, Sajith Premadasa, M. A. Sumanthiran.
• Think Tanks & Economists: Nishan de Mel (Verité), Dr. Ganeshan Wignaraja, Asanga Abeyagoonasekera, Akhilan Kadiragamar,
• Media Figures & NGOs:Feizal Samath, Roel Raymond, Jehan Perera (NPC), CPA, Groundviews, Hashtag Generation, Roar Media, YAMU, Tisaranee Gunasekera
• Online Influencers:SL Vlog, Patta History.

 

Ironically, those criticizing the China deal were the ones who executed the lease in 2016–2017 under the Ranil-Mangala administration.

 

Who Pushes the Debt Trap Narrative and Why?

• Western think tanks (CSIS, Chatham House, Carnegie).
• Indian lobbies (ORF, SVIF).
• Strategic players keen to keep Sri Lanka in their geopolitical orbit.

 

Comparative Silence on Indian Strategic Control

 

While Hambantota draws disproportionate international scrutiny, India’s expanding footprint in Sri Lanka’s strategic infrastructure receives little to no public or diplomatic pushback:

• Trincomalee Oil Tank Farms: India controls 85 of 99 tanks.
• Colombo Dockyard: Controlled by India’s defence ministry company -to build military ships in Sri Lanka.
• Colombo West Container Terminal: 51% owned by Adani Group.
• SAGT (via John Keells): Lease may be extended with Indian partnership.
• Renewable Energy Grid (North): Led by Adani; strategic implications for Sri Lanka’s grid sovereignty.

 

These deals rarely spark public debate-despite their implications for national sovereignty and regional neutrality.

 

Troika Vision Realized:

 

Hambantota’s potential lies in synergy:

1. Integrating Port + Airport (Mattala) + Industrial Zone.
2. Bypasses congested Colombo for direct access to global trade.
3. During COVID-19 pandemic, Mattala Airport played a key logistics role.

 

Think Strategically, not Emotionally

 

The so-called “debt trap” narrative was never about protecting Sri Lanka. It was about limiting & controlling Sri Lanka’s choices and its partnerships.

 

Hambantota Port lease was a sovereign decision. It has delivered returns. It is generating income and employment. It preserves national sovereignty.

 

Instead of fearmongering, Sri Lanka must engage with all partners based on facts, mutual benefit, and strategic independence for national interests —not emotion or outdated ideological loyalties or geopolitical appeasement.

 

Sri Lanka must judge partners by outcomes, not narratives or compromise & appeasement.

 

 

 

 

Shenali D Waduge