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Ports Ministry wants ownership of artificial island in HambantotaA proposal by Ports Minister Arjuna Ranatunga that the Sri Lanka Ports Authority retain the ownership of an artificial island built with soil dug out during the construction of the Hambantota port is to be taken up during talks with the Chinese company vying to take over its management.
The issue was raised at a meeting with China Merchants Port Holdings Company (CMPort) last week. Minister Ranatunga, who accompanied Prime Minister Ranil Wickremesinghe on his official visit to Australia this week, had pointed out that the island was not funded by a Chinese loan. Therefore, it did not need to be part of any privatisation effort aimed at offsetting the heavy debt incurred by Sri Lanka in building the port.
CMPort had countered that if the 45-hectare island were to be taken out of the equation, it would lower its investment in the privatisation. The Ministry contended that the Government should then look at the second Chinese party — China Harbour Engineering Company — that had also bid for the Hambantota Port. The issue is being hammered out in ongoing discussions.
At the February 9 meeting, CMPort had also wanted to adhere to the original framework agreement that grants it comprehensive control over Hambantota port, including internal security. That document was signed in December between CMPort and the Secretaries of the Ministries of Finance, Ports and Shipping, and Development Strategies and International Trade. It is also up for further negotiation.
The Concession Agreement — a negotiated contract between a company and a government that gives the company the right to operate a specific business within the government’s jurisdiction, subject to certain conditions –is yet to be signed. The Framework Agreement provides for the setting up of a joint venture (JV) company between CMPort and the Sri Lanka Ports Authority in which the Chinese company will hold 80 percent of shares and SLPA 20. The term of the lease and concession period is 99 years.
The Chinese-led venture is set to gain authority over pilotage (directing ship movement) service, navigation service, tug service, berthing service, port security service, lighterage (use of lighters in loading, unloading and transporting ships) service, shipping and transshipping, warehousing, mooring service, wharfage, supply of water, fuel and electricity, bunkering and inner anchorage service.
The Chinese also gain control of diving and ship repair including underwater ship repair service, handling petroleum, petroleum products and lubricating oils to and from vessels and between bunkers and depots, and any other service incidental to all services stated above.
The JV will acquire or lease (as the case may be) all operational assets and common user facilities, including container terminals, multi-purpose terminals and oil terminals with fuel storage and supply facilities, the manmade island, sea channel, breakwater, access road, turning basin, navigation, cofferdam and common user terminals.