ADB to lend Sri Lanka 0 mln to expand Colombo port

COLOMBO, Mar 20 (Reuters) The Asian Development Bank said on Tuesday it would help fund the expansion of the island's main port in Colombo with a 0 million loan, one of a raft of government infrastructure projects.

President Mahinda Rajapakse's government wants Sri Lanka to become a major trans-shipment hub, and is also set to start building a new Chinese-funded 0 million harbour on the island's south coast in June.

''In recent years, Colombo port has lost market share in trans-shipment because it does not have the operating capacity of depth required to berth the latest generation container ships,'' Prodyut Dutt, senior transport specialist with ADB's South Asia department, said in a statement.

The project will be a partnership between the public and private sectors, and container-handling capacity will be increased from 3.3 million 20-foot containers in 2006 to 5.7 million by 2010 and eventually to 10.5 million, the ADB said.

The ADB said its loan would have a 25-year term, include a five-year grace period and would be provided under the London interbank offered rate-based lending facility.

It also said security measures had been highlighted and incorporated into the project at a time when the state fights land and sea battles with Tamil Tiger rebels amid a new chapter in a two decade civil war that has killed around 68,000 people since 1983.

A separate port the government is planning in the southern town of Hambantota, which is close to international shipping lanes, will have a 1,000-metre jetty and an oil terminal in the first phase by end-2010.

That port plans to offer offshore facilities like ship handling, supply of water and fuel and crew changes and will later be expanded to handle 20 million containers annually and aimed to become a centre for trans-shipment, like Singapore.

The government is also planning a second international airport in remote Hambantota, which is Rajapakse's home constituency.

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