US$10 billion Hambantota Development up for Chinese grabs
View(s):The US$10 billion Hambantota Development project contracts including the Mattala Airport and Hambantota Port are set to be offered to Chinese investors willing to make high investments stipulated by official authorities bypassing the tender process, several local representatives of foreign investors alleged.
Chinese Ambassador in Sri Lanka Yi Xianliang has recommended several Chinese investors to the Cabinet Appointed Negotiating Committee (CANC) which is entrusted with the task of awarding Hambantota Development project contracts, it is reliably understood. The Hambantota project consists of new oil refineries, a power generation plant and industrial zones on 1500 acres.
Official sources said with a government decision to convert debt into equity necessary priority will be this given to this aspect in selecting a party. Minister of Development Strategies and International Trade Malik Samarawickrema has been discussing with some Chinese companies and also the government of China about the possibility of forming public-private partnerships, in which part of the debt will become equity held by the Chinese companies.
Sri Lanka has also requested China to swap some of the $8 billion it owes for equity in infrastructure projects and offered to sell stakes to Chinese firms. Several Chinese investors recommended by Ambassador Xianliang have expressed their interest for some of the project contracts including the Hambantota Port at a hurriedly-convened CANC meeting in Colombo recently, the sources revealed.
Chinese investors were asked at the close doors meeting chaired by two high-level veteran advisors of the government to accept a stake up to 80 per cent of total Hambantota project cost. Some investors who expressed willingness to take less, at 60- 65 per cent of the stake had been rejected by the two veteran advisors, sources said. If the terms and conditions of the Chinese investor are not satisfactory, the other proposals received as per the Expressions of Interests will be evaluated, officials disclosed.
Contacted for comment on this system of awarding project contracts to Chinese investors, Colombo University Senior Economics Lecturer Dr. Lalithasiri Gunaruwan noted that project contracts should not be awarded in haphazard manner. Strategic studies should be conducted by experts on the feasibility of such projects before trying to secure Chinese investments, he said adding that the government should not antagonize India by giving priority to China in this endeavour. The challenge is to find a balance between these two large countries and not take the side of one country, he said.