Cabinet approval has been granted for Sri Lanka to enter into a ‘Concession agreement on the Port of Hambantota’ with China. Its implementation is to be supervised by a Cabinet Sub-Committee chaired by Minister of Special Assignments Dr Sarath Amunugama.
The ministers; Malik Samarawickrama, Arjuna Ranatunga, Susil Premajayantha, Champika Ranawaka, Mahinda Amaraweera and Sagala Ratnayake are included in the sub-committee. The final draft of the agreement which was submitted to Cabinet this week received the go-ahead but Deputy Minister of Development Strategies and International Trade, Sujeewa Senasinghe said they had not agreed on a date to ink the agreement,
“We will go ahead with an understanding and China will start construction on the third phase. The Chinese understand our political situation”, he said addressing the weekly cabinet briefing at the Parliamentary Complex yesterday.
The agreement which received the stamp of approval from the Attorney General, “aims at preparing future plans, financial provision, operational promotion and development of infrastructure including completed phase I and II and proposed phase III”.
The Port which will be handled through a joint venture between the Government of Sri Lanka run Sri Lanka Ports Authority (SLPA) and the China Merchant Port Holdings Company Limited, will have 20 percent stake being given to the SLPA while 80 percent at the cost of USD 1.12 billion go to the Chinese.
“The agreement will also allow Sri Lanka to buy back a further 20 percent stake after 10 years of operation, taking Sri Lanka’s total stake in the venture to 40”, explained Senasinghe.
He added that the full cost of the third phase would be borne by the Chinese.
Sri Lanka at present is also in debt to China for Rs 230 billion at a seven percent interest rate for the first and second phases of the project. The tenure of the joint venture, according to the deputy minister is for 99 years and along with the Port, the Chinese would also be getting 1235 acres adjoining the port as part of the deal.
“The President has decided that this should happen and that this was the best way to go about it to come to a speedy conclusion. The cabinet subcommittee will look at the most advantageous agreement to Sri Lanka”, said Senasinghe.
The Hambantota Port agreement has been highly controversial with the employees of the port as well as other organizations protesting against divesting a large proportion of it to China. The government in the meantime has pointed out that given the mountain of debt it has to deal with, it has no choice but to sell a majority stake to China to recover from the Chinese loans.
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