Sri Lanka's Hambantota bunker terminal project will start with an initial capacity of 100,000 metric tonnes (mt) instead of the 500,000 mt, a project source has said.

The Sri Lanka Ports Authority (SLPA) had claimed that the bunker terminal would start with 500,000 mt of capacity by mid-2010.

Janaka Kurukulasuriya, Chief Engineer Southern Port Development Project, said an initial capacity of 100,000 mt was being planned instead.

''Work on the terminal has been progressing and it will have 100,000 mt in capacity, scheduled for completion during the first quarter of 2011,'' he told Bunkerworld.

Another local source familiar with the project said the plan was to build 10 tanks of 10,000 mt capacity each.

The bunker terminal will start by offering 180 centistoke (cst) bunker fuel and marine gasoil (MGO), and possibly 380 cst bunker grade, the source told Bunkerworld.

The source, however, said ''ground work for the construction of the terminal may not have started.'' But he added that the completion date of early 2011 is achievable.

The financing of the bunkering facility has this week received support from China's Exim Bank. The bank has pledged $65 million out of a total project cost of $76.5 million for the terminal.

The remaining $11.5 million will come from the SLPA.

The bunker facility forms part of a new port being built in southern Hambantota, also financed by China.

The entire Hambantota Port Development Project consists of four stages, and is expected to be completed in 15 years from the start of 2007.

Apart from the bunkering terminal, the first phase of the project includes a 1,000-metre jetty and an oil refinery estimated to cost $1 billion.

The proposed port is expected to spark the development of harbour-related industries such as ship repair, ship building, bunkering, break bulk, power generation and a free trade zone.