Cabinet gives green light to lease H’tota port to China

Published : 9:10 am  July 26, 2017 | No comments so far |  | 

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Agreement would be signed by the Sri Lanka Ports Authority and the China Merchant Ports Holding Company on Saturday

Sri Lanka Ports Authority will have a share holding of 50.7% and China Merchants Port 49.3%

Agreement will be presented in Parliament on Friday

 

By Sandun A Jayasekera

The much talked about framework agreement on the Hambantota Port Development Project (HPDP) would be signed on Saturday after the Cabinet gave its consent yesterday, Ports and Shipping Minister Mahinda Samarasinghe said. 

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Pic by Pradeep Dilrukshana 

 

He said the agreement would be signed by the Sri Lanka Ports Authority (SLPA) and the China Merchant Ports Holding Company (CMPHC).

  
The minister told reporters that the ‘Hambantota Port Concession Agreement (HPCA) would be presented in Parliament on Friday and the government was ready to accommodate any reasonable proposals or amendments to the agreement by any member of the government or the opposition. He said none of the ministers raised any objections when the HPDP was presented by him to the Cabinet.   
The Framework Agreement to re-develop the Magampura Port in Hambantota on the basis of a Public Private Partnership (PPP) and the equity ownership would be split with 70% to the CMPHC and 30% to the SLPA.

  
Now that Cabinet approval has been granted the Framework Agreement envisages the re-structuring of the Public-Private operations of Hambantota Port with a total investment of US$1.4 Billion by the CMPHC and all immovable and movable properties would be transferred to two fully government owned Sri Lankan companies — the Hambantota International Port Services Co. (Pvt) Ltd (HIPS) and Hambantota International Port Group (Pvt)Ltd (HIPG).

  
“The two companies will undertake the management of Port services of the Hambantota Port such as port security, navigational services, pilot services, anchorage, provision of navigational aid for dredging, widening, emergency responses and pollution control Services. Sri Lanka Ports Authority will have a share holding of 50.7% and China Merchants Port 49.3%,” the minister said.   

 

 

The two companies will undertake the management of Port services of the Hambantota Port such as port security, navigational services, pilot services, anchorage, provision of navigational aid for dredging, widening, emergency responses and pollution control Services. Sri Lanka Ports Authority will have a share holding of 50.7% and China Merchants Port 49.3%

“The HIPG with an equal share division is similar to that of South Asia Gate Way Terminals (SAGT) and Colombo International Container Terminals (CICT) and accordingly Sri Lanka Ports Authority (SLPA) will hold 15% and China Merchants Port 85%. The lands totalling 1,100 hectares but not 15,000 will only be leased out to the two companies referred below and CMPHC has agreed to sell a further 20% equity within a period of 10 years to the SLPA.  

 
The agreed investment value is for the project isUS$ 1.12 Billion and the SLPA has the right to purchase all the shares upon expiry of 70 years or transfer of majority of 76.8% in the Company “HIPS” and a share holding of 60% in the Company “HIPG” to Sri Lanka Port Authority in 80-years at US$ 1.

  
Terms of the Concession Agreement is 99 years. Whilst CMPHC has agreed to make a royalty payment based on cargo throughput maximum dividends would be payable on profits derived.

  
Despite gazette notifications issued in 2007/2008 with a land area of 1,574 hectares as Hambantota Port limits, a land area of only 1115 hectares has been identified to be leased out to the Companies. Minister of Ports & Shipping has the right to appoint a Port Regulator and the sole responsibility and authority in relation to National Security is with the Government of Sri Lanka. The transaction will be subject to all applicable Laws of Sri Lanka such as Sri Lanka Ports Authority Act, Merchants Shipping Act, Customs Ordinance, Immigration Regulations, Licensing of Shipping Agents and other applicable National Laws and relevant International Treaties and Conventions, the minister said. 

 

 

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