Sri Lanka's Hambantota port project has taken a step forward with the signing of a financial agreement under the patronage of President Mahinda Rajapaksa.

The government has entered into the financial agreement with the EXIM bank of China.

According to offical information from Sri Lanka, China is expected to contribute more than 85% of the total cost of the project, with the first phase costing some $450 million.

The entire project, to be carried out in four phases, is due for completion in 15 years.

The Chinese government has agreed to promptly provide funds after discussions held with President Rajapaksa during his recent visit to China.

Preliminary work on the Chinese-backed Hambantota port project got underway in June this year.

The port will have 11 kilometres (km) of berths capable of handling 20 million twenty-foot equivalent units (TEUs) per year.

Included in the project are a gas-fired power plant project, a ship repair unit, a container repair unit, an oil refinery and a bunkering terminal.

Construction on the bunkering terminal is expected to start sometime this month or in December, and will be completed in 39 months, according to R.M.P.B. Wickrama, vice chairman of the Sri Lanka Ports Authority.

The plan is for the terminal to handle up to 500,000 metric tonnes (mt) of oil products a year.  It is estimated to cost about $87 million.

The terminal can be further expanded by up to one million mt, depending on demand, Wickrama told Bunkerworld earlier.