Business Times

Negotiations on port deal set for next week

The next round of negotiations on the Colombo Port Expansion Project is scheduled for this Wednesday between the China Holdings Merchant International (CHMI) and Aitken Spence (AS) Shipping Limited consortium and the Cabinet Appointed Negotiating Committee (CANC).

Informed sources told the Business Times this week that negotiations will focus on the draft Build, Operate and Transfer (BOT) agreement to which CHMI/AS is seeking amendments. A government source said that the CANC, which will be assisted by the Technical Evaluation Committee (TEC), is amenable to minor amendments but not those that will affect the competitiveness of the bid.

A source close to AS said representatives from CHMI were in Colombo a few weeks ago to iron out some disagreements with AS on the terms of the BOT agreement and that a consensus has now been reached, allowing the consortium to take up a joint stand on the agreement. Chairman and CEO of AS Shipping Parakrama Dissanayake declined to comment.

The CANC has also accepted the US$150 million net present value financial bid submitted in late October 2009 by CHMI/AS after negotiations. The government which had initially been looking to get US$240 million had revised that figure to US$160 million during negotiations and accepted US$150 after an earlier proposal of US$125 million by the consortium. Chairman of the Sri Lanka Ports Authority (SLPA) P.B. Wickrema could not be reached for comment.

The CHMI/AS consortium were the sole bidders for the development of the south container terminal after the government called for a fresh round of bidding was called in January 2009. The first round was marred by allegations of impropriety and a lack of transparency regarding the tender process. The Colombo Port Expansion Project is partially funded by the Asian Development Bank (ADB) to the amount of US$300 million.

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