Addressing the media yesterday at the Ministry of Ports and Shipping, Minister said that the terms of concession agreement is for 99 years in which Sri Lanka will have 30 percent ownership and CMP will have 70 percent ownership. He added that agreed investment value was USD 1.12 Billion.
The Minister said the proposed agreement will be presented to Parliament today (26) and a debate on this has been scheduled for Friday (28).
“The agreement will be signed on Saturday after the debates,” he said.
Two separate Sri Lankan companies would be formed to deal with administrational and commercial operations of the Port. Hambantota International Port Services Company (HIPS) will undertake the management of port services such as port security, navigational services, pilotage, anchorage, provision of aids to navigation, dredging, widening, emergency responses and pollution control services. The majority equity of this company will be vested with Sri Lanka and Sri Lanka Ports Authority (SLPA) will hold a share of 50.7% and CMP 49.3%.
Commercial operations will be handled by Hambantota International Port Group (Pvt) Ltd (HIPG). The majority equity of this company would be vested with CMP and SLPA will hold a share of 15% and CMP 85%.
Minister Samarasinghe said CMP had agreed to sell SLPA a further 20% equity within a period of 10 years. He added that SLPA has the right to purchase all shares upon expiry of 70 years or transfer majority of 76.8% in the company HIPS and a shareholding of 60% in the company HIPG to SLPA in 80 years at USD 1.
Minister further said CMP had agreed to make a royalty payment based on cargo throughput and maximum dividends would be payable on profits derived.
The Hambantota Port was constructed with an investment of Rs 193 billion through commercial loans obtained by the Sri Lankan government and the annual loan repayment for SLPA is around Rs 9.1 billion.
“Investment of USD 600 Million is required to equip the container terminal and make the port fully operational. The annual loan repayment commitment operations from November 2011 and as at end of 2016 the accumulated loss was over Rs 46.7 billion. After the agreement is signed, the Treasury board would take the responsibility of loan repayments, therefore Rs 9.1 billion would be remained with the SLPA and they can use for development activities”, he said.
Of the 1,574 hectares of land area of the port only 1,115 hectares will be enlisted to the lease agreement.
“Despite gazette notifications issued in 2008 with the land area of 1,574 hectares as Hambantota Port limits, a land area of only 1,115 hectares has been identified to be leased to the companies, which carry out port management,” the Minister said.
He added that the Ports and Shipping Minister has the right to appoint a Port Regulator. Besides, the sole responsibility and authority in relation with national security is with the Government of Sri Lanka. Accordingly, overall port security, customs handling, immigration and emigration activities are carried out by the Sri Lanka side deploying local personnel.
According to the agreement Chinese stakeholder cannot use the port as a military naval base. If a foreign ship especially a naval ship will call over at the port, the permission should be obtained from the Sri Lankan Government.
“The transaction will be subject to all applicable laws of the country such as Sri Lanka Ports Authority Act, Merchants Shipping Act, Customs Ordinance, Immigration Regulations, License of Shipping Agents and other applicable National Laws and relevant International Treaties and Conventions,” the Minister added.
Minster Samarasinghe said that once the agreement is forwarded to the parliament, new proposals for the agreements are welcome aiming to fine tune the agreement.
Minister noted that the Government never sells the port even if certain people level baseless allegations. Minister highlighted that the agreement is a ‘Win – Win’ situation for the both parties.
“I was instructed and ordered by the President at the Cabinet meeting to make sure that the port is not going to be sold” he added.
Responding to a question raised by a journalist about the employees, the Minister said that within six months efficiency and diligence of the employees will be looked at to decide whether to retain them or not. He added that the employees who get removed will be paid a VRS based on labour laws of the country.
The Minister further said that barring trade unions with political agenda, the others have agreed with the revised agreement. SLPA Chairman, Dr Parakrama Dissanayake said continuous losses were threatening the survival and continuity of SLPA.
“If we take off the car carriers which were forced to shift from the Port of Colombo to Hambantota, the number of ships handled in 2015 was only 19 and in the year 2016 was 14 and from January 2017 to June only 10 ships”, he said.
Samarasinghe said the transactional value will remain at USD 1.12 Billion as per frame work agreement, however only USD 973 will be received by the Treasury, with the remaining USD146 million will be pumped to the Hambanthota Port as investment, Minister said.
Out of the USD 973 million, 10% will be payable immediately after signing of the agreement, with another 30% to be paid within three months. The remaining 60% is to be paid within the next 6 months.
“This agreement is a win-win situation for both parties. We were able to negotiate the share holding to increase Sri Lanka’s share. When I took over negotiations there were no reference to royalty payable to the Ports Authority, it only included dividends. The new agreement includes royalty payments. We have also been able to ensure that no amendments were made to the Port Authority act, which was a huge hurdle for us,” the minister said. (CDN)
