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High-level concern over H’tota project
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President Maithripala Sirisena has included his own nominee in a committee negotiating the concession agreement for the Hambantota port privatisation.
While the Government proposes to sign the final deal with China Merchants Port Holdings Company (CMPort) in Hambantota on January 7, no finality has been reached on its terms and conditions.
By inducting one of his advisors into the committee of ministry secretaries formulating the agreement with CMPort, the President has made it clear that he wants to be kept posted regularly of the decisions made. The advisor, Dr. Sarath Rajapatirana, was appointed on Friday, just days before the scheduled date of signing. He is a governing board member of the Institute of Policy Studies and an economic advisor to President Sirisena, who has been in consultation with China’s Ambassador Yi Xinliang.
The President’s move came amidst complaints by the Sri Lanka Ports Authority (SLPA) that it had little influence in the negotiations being carried out with CMPort, the sources said. Representations had been made in this regard to the President and a set of documents handed over.
The Government hopes to finalise the concession agreement as soon as possible, Development Strategies Minister Malik Samarawickrama confirmed to the Sunday Times yesterday. He said the committee would hold meetings throughout next week. He claimed not to know further details saying, “My job is over. My job was to bring the investor in.”
The objective of the Government is to sign the concession agreement for the Hambantota port on January 7 but the finer details have not been released. On that day, Prime Minister Ranil Wickremesinghe will also preside over the launch of the Hambantota Development Programme, organised by the Ministry of Law and Order and Southern Development. Invitations have already been sent out.
CMPort was formerly known as China Merchants Holdings (International) Ltd or CMHI. Its name was changed in April last year. It is the same entity that signed an agreement on September 16, 2014, with the Mahinda Rajapaksa administration to develop the Hambantota port.
These details transpired during a meeting between President Sirisena and Chinese Ambassador Yi on Wednesday when the latter met the President to raise concerns over corruption allegations related to the Hambantota deal.
In 2014, a Supply, Operate and Transfer (SOT) agreement for the Hambantota Port Phase II was entered into between representatives of CMHI, China Construction Company Ltd and the SLPA in the presence of former President Mahinda Rajapaksa and his Chinese counterpart Xi Jinping. The partners in the SOT project were to have been CMHI, China Harbour Engineering Company Ltd and the SLPA.
Under the deal, a company set up by the SLPA in partnership with the two Chinese firms was to have brought in equipment and operated container berths and yards in Hambantota Port Phase II for 35 years. One terminal was to have been run by the SLPA. But after annulling that arrangement last month, the Government consented to sign over an 80 percent stake in Magampura Mahinda Rajapaksa Port to a single Chinese company for 99 years.
The SLPA will now hold 20 percent equity in the joint venture to be set up with China Merchant Port Holdings Company Ltd. CMPort will pay a transaction value of US$ 1.4 billion to the Government and will consider a request from the SLPA for royalties only when port utilisation reaches “a mutually-agreed level of performance”. The new arrangement will cover the entire port and its services.
At Wednesday’s meeting, the Chinese Ambassador expressed concern over allegations by the Government’s coalition partner Jathika Hela Urumaya that certain ministers connected to the US$ 1.4 billion Hambantota port deal had visited China to get their commissions for fixing the project. Mr. Yi had explained the transaction and connected matters, the sources said.
According to the latest framework agreement, the CMPort is not bound to pay any dividends from the port for 15 years to the Sri Lankan partner even after becoming a commercially viable venture. The company will also enjoy tax free benefits during the same period.
Amidst all this, the Lands Ministry has suspended the surveying of 15,000 acres earmarked to be handed over to CMPort under the privatisation deal. The interruption is temporary and was prompted by public protest in Hambantota, Lands Ministry Secretary I.H.K. Mahanama said. In recent days, there have been demonstrations prompted by fears that the massive land acquisition plan will lead to loss of livelihood and homesteads.
Minister Samarawickrama has been quoted as saying that the 15,000 acres project will go ahead as most of the land is owned by the State. Compensation will be paid for any private properties that are taken over.
The Surveyor General’s Department had started demarcating the boundaries based on areas identified by the prospective investor. “They were earmarked and we got ready to see whether we can go forward,” a Lands Ministry official said. “The Prime Minister instructed us to survey the boundaries. When we began that, the people opposed it.”