Hambantota Port Deal: Pact signed — Masses in the dark

The 99 year lease period is far too long and does the business plan of the investor justify that, no one knows. Somewhere it is said that Ports Authority can buy a further 20% share after 10 years and Sri Lanka has the right to re-purchase after 70 years. At what cost? Are they ever going to be realities? Several future generations have been tied down by this Government without their consent.


by Dhanapala Godage

( September 10, 2017, Colombo, Sri Lanka Guardian) The Hambantota Port Concession Agreement has been signed and presented to the Parliament also according to news items. But the masses remain in the dark as to the important contents in the agreements and how they benefit the people of this country. Those who go through the internet or those who want to use Right to Information to gather more information may find more details but what about every common man living around Hambantota and every other citizen of this country who has the right to know about the future of this national asset.

This concession agreement is said to effectively convert the port loans to equity and cut down the debt burden. Incidentally the term concession agreement is said to have much wider powers unlike the Build Operate and Transfer (BOT) agreement that has been signed for the Colombo Port. Unlike in Colombo where there is the BOT agreement for the port’s commercial operations with 15% shareholding by the Ports Authority and total port administration and services remaining wholly with the Ports Authority, in Hambantota there are two companies one for commercial operations named Hambantota International Port Group (HIPG) Ltd where a 15% share is owned by the Ports Authority (similar to Colombo) and Hambantota International Port Services (HIPS) Ltd where 50.7% shareholding belongs to the Ports Authority which company handles port services. The latter company is a new concept not found in Colombo. The Sri Lankan Government is said to hold total authority for national security. The role of the company HIPS is not clear and why it is different from Colombo with satisfactory performance in Colombo for over two decades in Public Private Partnership (PPP) projects.

The physical port asset built using a massive Exim Bank loan of US$1.4 billion is invested in the company HIPG for the 15% equity. How is the investment of US$1.12 billion from the investor CM Port is accounted for, is the money coming to the treasury, is the bank loan settled fully are the questions that public should have answers to. These are matters that should be convincingly explained to all and ultimately it has to be beneficial to every citizen of this country. The Ports Authority has paid back about US$220 million from Colombo earnings, is that accounted for?

The 99 year lease period is far too long and does the business plan of the investor justify that, no one knows. Somewhere it is said that Ports Authority can buy a further 20% share after 10 years and Sri Lanka has the right to re-purchase after 70 years. At what cost? Are they ever going to be realities? Several future generations have been tied down by this Government without their consent.

Hambantota Port commenced operations in November 2011 and up to end 2016 had reported a total loss of Rs.46.7 billion, according to a ministry statement. In such a situation PPP seemed the best choice without letting the asset perish though someone said the Hambantota Port holds the key to Sri Lanka’s golden era and should be operated by us.

Neither the Government nor the responsible authorities have so far explained to the masses in understandable language the arrangements for Hambantota Port, the important clauses in the agreements, why there are two companies and what the benefits are to the country.

(The writer was Chief Engineer Ports, Managing Director of the Sri Lanka Ports Authority and the Project Director of the Colombo South Harbour Development Project.)

Author: Sri Lanka Guardian

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