Colombo, Mar 20, 2007 (ABN Newswire) - Asian Development Bank (ASX: ATB) will help fund the expansion of the Colombo Port with a $300 million loan that will substantially upgrade the facility.

"Colombo Port is a natural transshipment hub for South Asia," said Prodyut Dutt, a Senior Transport Specialist with ADB's South Asia Department. "In recent years, Colombo Port has lost market share in transshipment because it does not have the operating capacity or depth required to berth the latest generation container ships."

The Colombo Port Expansion Project will be implemented as a public private partnership project. The public sector will implement the common user harbor infrastructure works, such as dredging and breakwater construction sufficient to accommodate three new container terminals.

The private sector will develop and operate the container terminals which will be built sequentially. The Project will also help establish a new marine operations center, relocate an underwater oil pipeline and provide navigational aids.

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. This expansion will assist Sri Lanka in generating additional income from transshipment. Foreign direct investment in the ports sector is expected to increase by about $800 million by 2024.

Under the current conflict situation, security measures have been highlighted and incorporated into the project. The project will promote Sri Lanka's overall economic growth by improving its international competitiveness with lower transport costs and faster delivery times. Faster economic growth will bring benefits to all citizens of Sri Lanka. Through this and other projects, ADB remains constructively engaged in supporting the country's development under the current difficult situation.

The $300 million loan for the project will come from ADB's ordinary capital resources and be provided under the conditions of the London interbank offered rate-based lending facility. The loan, which will have a 25-year term and include a 5-year grace period, will be administered by the Sri Lanka Ports Authority under the supervision of the Ministry of Ports and Aviation.