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Sri Lankan President denies agreement with Chinese company on Hambantota port

The head of Sri Lanka Podujana Peramuna says the Hambantota port affair shows that there is complete confusion in the government.

Published: 06th January 2017 10:44 AM  |   Last Updated: 06th January 2017 10:44 AM   |  A+A-

Express News Service

COLOMBO: In the context of the raging controversy over the grant of 80 per cent stake in the Hambantota port to the Chinese state-owned China Merchant Ports Holding Company, Sri Lankan President Maithripala Sirisena has said that there is no such agreement and that any agreement his government will sign will be in the country’s interest and transparent.

“As of late, there has been a massive opposition towards the Hambantota Port and the Industrial Zone there. I must say very clearly that nearly two years ago, the people of this country elected me as its chief servant with the trust they had in me. Therefore, for the sake of my motherland and the people I will leave no room for that trust to be broken. This agreement on the Hambantota Port and Industrial Zone that is spoken of so much, has not even been formulated as yet,” the President said on January 5.
A day after Prime Minister Ranil Wickremesinghe said that there is no problem over the grant of 80 per cent stake to the Chinese company, Minister for Strategic Development Malik Samarawickrama said that the deal is yet to be fully negotiated and that the aim is to sign all the eight or nine agreements by the end of January.
He hinted that there could be changes in the 80 per cent stake the government had committed to give through the already signed Framework Agreement.
But contradicting this, the cabinet spokesman, Rajitha Senaratne, said that 80 per cent will be given to the Chinese company. He was reiterating Prime Minister Ranil Wickremesinghe’s assertion that there is no problem about giving 80 pe rcent.

Speaking to Express on the controversy, the head of the Sri Lanka Podujana Peramuna (SLPP) Prof. G.L.Peiris said that the Hambantota port affair shows that there is complete confusion in the government at the highest levels. People wonder if there is a government in Sri Lanka, he added.
Protesting against the deal, the Joint Opposition leader Dinesh Gunawardena and several other MPs wrote to the President calling for a review.

The letter said that in September 2014, under the Mahinda Rajapaksa government, the Sri Lanka Ports Authority (SLPA), had entered into an agreement with the China Merchant Holdings (International) Company Ltd and the China Harbour Engineering Company Ltd, to lease the Hambantota Port (Phase II) on a Supply, Operate and Transfer (SOT) basis for 35 years.

With the change in government in 2015, this agreement was nullified on the grounds that the US$ 1.4 billion could not be repaid.

The China Harbor Engineering Company Ltd. and China Merchant Ports Holding Company Ltd. tendered separate proposals. But the criteria for their selection were not defined.

The China Harbor Engineering Company Ltd proposed an initial payment of approximately USD 730 million for a 50-year lease period, during which, a payment structure similar to a royalty was proposed, which made the value of this proposal USD 1.5 billion. This was reported as the option preferred by the SLPA, as it would have benefitted it and the country.

But the proposal selected was that of the China Merchant Ports Holding Company for a one-time payment of USD 1.08 billion, and a 99-year lease, extendable for a further 99 years, which landed the Wickremesinghe government in deep trouble.

Sri Lanka Podujana Peramuna leader Prof. Peiris told Express on Friday that given the 15-year tax holiday, the country will be denying itself valuable income from the port.   

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