Previous Hambantota project deals trigger catch -22 for present Government
While the stage is set to hand over the Hambantota Port to a Chinese company on long term lease basis and also implement the Industrial Zone project next week, investors are arguing that previous (now held-up) agreements they had with the Rajapaksa regime in this project site should be honoured by the present government.
The former regime had implemented one of the most ambitious development plans in the world by setting up a US$1.4 billion deep sea port, an international airport, as well as a tourism zone, conference centre, an international cricket stadium and some of the best highways in the country.
Also the then government had entered into agreements with local and international firms to set up factories at a large industrial zone, an LNG plant, and several other development projects. Some of those agreements were government to government and cannot be abrogated.
The previous administration has mainly sought Chinese assistance to finance these projects and China has provided the country with $8 billion in soft loans.
Under this set up the government is compelled to sign the lease agreement with Sri Lanka Ports Authority (SLPA) as the public partner and China Merchant Port Holdings as the private partner to establish several companies to implement the agreement, official sources say.
The present government has now been left with the task of implementing a large industrial zone, and LNG plant projects of Rajapaksa’s Hambantota development plan reviewing the previous agreements reached by him.
In this situation, Greenlink Global Consulting Inc. (Greenlink), an international firm with Canadian and Chinese links has urged the government to adhere to the agreement reached with them in 2012 by the previous regime to implement the Hambantota LNG Energy Project (HEP). Soon after the Cabinet approval was given to the Hambantota port deal this week, Greenlink reiterated its desire to the Government to approve its project.
The Ministry of Power and Energy, has been put on legal notice by Greenlink through a Canadian law firm for not considering or entertaining any proposal for development of any power project at Hambantota in breach of rights granted to Greenlink, official sources said.
In 2010 Greenlink introduced a power and energy developer which is a subsidiary of a renowned US blue chip asset management company to Sri Lanka.
In 2012 this energy developer entered into an MOU with the Board of Investment of Sri Lanka (BOI) for the LNG facility, gas pipe line and 500MW-1000MW power plant project in Hambantota, The project cost was S$1.4 billion.
However in March 2013 the Ceylon Electricity Board (CEB) requested an independent study of the use of LNG as a fuel and hence the approval process was delayed, the company said.
Government officials had then recommended initiating a government-to-government deal for the HEP. Thereafter Greenlink approached the Canadian government in February 2016 and facilitated the entry of Crown Corporation of the government of Canada to take up the project.