High level negotiations are on between the government of Sri Lanka and the bidding consortium on the Colombo Port Expansion Project with both parties optimistic that a deal will be made by tomorrow afternoon on amendments proposed by the consortium on the Build, Operate and Transfer (BOT) agreement.
Highly placed officials told the Business Times this week that the Technical Evaluation Committee (TEC) which has been empowered by the Cabinet Appointed Negotiating Committee (CANC) to iron out the issues pertaining to the recommendations made by the China Merchant Holdings International (CHMI) and Aitken Spence (AS) consortium, will report back to the CANC by 2 pm on Monday.
According to one official, amendments to the BOT agreement that the government has not been willing to concede on are the exclusivity clause and the construction timeframe.
The exclusivity clause gives the CHMI/AS consortium exclusivity in the Colombo port for a period of seven years.
The consortium was asking that the clause be amended to include the entire island. However, the government has been willing to concede on amendments that do not involve any material changes.
Five representatives from CHMI and three from AS have been attending the high level discussions.
The official said that the government has been accommodating and that both parties are ready to strike a deal.
The CANC has already accepted the US$150 million net present value financial bid submitted by the consortium in late October 2009 following several rounds of negotiations.
Chairman and CEO of Aitken Spence Shipping Parakrama Dissanayake declined to comment when contacted by the Business Times but did say negotiations were ongoing.
The government secured a loan of US$300 million in 2007 from the Asian Development Bank (ADB) for the public sector component of the Colombo Port Expansion Project.
The loan was made effective in 2008. According to the ADB’s Loan and Project Summary, the Project will promote economic growth by improving Sri Lanka’s competitiveness in the ports sector by expanding Colombo Port’s capacity.