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Sri Lanka's Hambantota Harbour is due to be officially filled with water on August 15th, 2010, with President Mahinda Rajapaksa expected to attend as the chief guest.

Several thousand locals have visited the construction site of the Hambantota Harbour over the past few days to see it before water is filled behind the breakwater later this month.

The first vessel is due to arrive at Sri Lanka's new Hambantota Port during the month of November, less than two years after the port development project was initiated.

The China-financed project, which commenced on January 15th 2008 will be the deepest port in the Indian subcontinental region with a draft of 17 metres.

The first phase of the project, which was initially due to be completed by April 15th 2011, has proceeded ahead of schedule despite reports in September 2008 that the project was facing suspension due to a cash flow crisis when project managers China Harbour-Sinohydro Consortium issued a letter to Sri Lanka's Ports and Aviation Minister, Chamal Rajapaksa, demanding payment.

It is hoped that together with Colombo, Hambantota will become a leading port in the country. However, there are also fears that the port may not earn enough to help repay the Chinese loan if cargo volumes are not sufficiently high.

Lack of income could lead to the government requesting that shippers shift container handling from Colombo to Hambantota, which shipping firms may be reluctant to do if it is not economically viable.

Local sources have pointed out that Sri Lanka would not benefit financially from shifting business from Colombo to Hambantota. The country's economy only benefits if Hambantota generates new business.

The new bunkering terminal at Hambantota is expected to provide a major boost to the Sri Lankan bunker market. The terminal will be designed to handle up to 500,000 metric tonnes of oil products a year. Depending on the requirement the terminal can be further expanded up to one million metric tonnes.

Last year the Sri Lankan government confirmed that the country would receive a $US65 million loan from China's Exim Bank to build a bulk storage tank farm in Hambantota that will also be used to store marine fuel.

The new facility will supply and store marine fuel, aviation fuel and LP gas and provide bunkering services for vessels passing by Sri Lanka. It is expected to have a total storage capacity of 82,000 cubic metres.