“China delays Hambantota Port deal’s final tranche”
Nalin Aponso, Chief Manager (Communication and Public Relations) of the Sri Lanka Ports Authority (SLPA), has sent a letter saying last week’s story under the above headline is “misleading and inaccurate”.
Given below is the full text of the letter with the Business Times response:
“It states among other things that the gazette notifications for granting tax exemptions to CMPort are yet to be issued. This is inaccurate and misleading as the relevant gazettes have been already published and exemptions have been granted to two local companies and not the CMPort, which is a foreign company.
Relevant gazettes for tax exemptions were published in terms of the Strategic Development Act for restructuring of Hambantota Port. Minister of Development Strategies and International Trade published these notifications on 7th December 2017 in Gazette Nos. 2048/31 and 2048/32. The resolutions for the approval of the Gazette Notifications were placed before the Parliament and approved with majority vote on 8th December 2017.
The beneficiary in each exemption is two local companies incorporated under the Companies Act Sri Lanka; namely Hambantota International Port Group Ltd (HIPG) and Hambantota International Port Services Ltd (HIPS). SLPA has a 15 per cent equity share capital in HIPG and 42 per cent in HIPS, while the remaining 58 per cent is held by HIPG. With SLPA’s 15 per cent share in HIPG it has an indirect majority of 50.7 per cent equity share capital in HIPS.
We wish to point out that there is no dispute in regard to the Lease Agreement executed by the Government of Sri Lanka last year, with SLPA as the LESSOR with HIPG as LESSEE. Cabinet approval for all land acquisition has been obtained and we are optimistic that the process would be completed before 9th June; the date due for the final tranche. It is also relevant to point out that the title of all acquired land will remain with the SLPA throughout the lease term.”
Response from our reporter:
The tax exemptions in question were granted in terms of the Strategic Development Act in December 2017 and those exemptions were stipulated under the previous Inland Revenue Act.
However we are reliably informed that these concessions should be in accordance with the new Inland Revenue Act No 24 of 2017 passed in Parliament in September 2017, two months before these concessions were granted.
Thus to formalise the process, a new gazette notification needs to be issued under Section 9 of the new Act indicating relevant tax exemptions granted earlier which will come into effect from April 2018.
On the issues pertaining to the man-made exclusive entertainment island for foreigners located adjacent to Hambantota Port, we stand by our position that this particular portion of land is vested with the government and has been designated for tourism purposes.
This is confirmed by Southern Province Chief Minister Shan Wijayala De Silva. He said this land should be gazetted as coming under the purview of the government or the Southern Provincial Council, before transferring or leasing it out to any other party.
The council has already protested against the move to take over this land which is located adjacent to the Hambantota Port.