Colombo Port project agreement still to be finalized

A final agreement on the Colombo Port Expansion Project bid will most likely be reached after the upcoming parliamentary elections and the Sinhala and Tamil New Year have concluded.

Technical Director at the Sri Lanka Ports Authority (SLPA) Chanaka Kurukulasuriya told the Business Times this week that the changes to the 160-page Build, Operate and Transfer (BOT) agreement requested by the Aitken Spence (AS) and China Merchants Holdings International (CMHI) consortium was discussed for eight consecutive days last month and that the SLPA agreed to some changes which they felt were reasonable.

Mr. Kurukulasuriya said changes to certain clauses that could not be agreed to by the project committee were referred to the Cabinet Appointed Negotiating Committee (CANC) to decide on. Mr. Kurukulasuriya said the Technical Evaluation Committee (TEC) is preparing a draft on the agreed changes that will be submitted to the CANC. “We have completed negotiations on our side but everything is subject to the concurrence of the CANC and the Attorney General,” he said. Clauses pertaining to legal matters have been referred to the Attorney General (AG). “As soon as we get concurrence from the AG, we can issue a letter of intent.”

Mr. Kurukulasuriya said the clauses which affect the competitiveness of the bidding cannot be changed. “Otherwise, other parties might come forward and say they could have applied so we cannot change whatever affects the competitiveness of the bid.” He explained that some conditions in the termination clauses have been changed.

Mr. Kurukulasuriya stressed that the agreement must be fair to both parties. “Most of the changes that were proposed have been withdrawn. Negotiations were smooth and there were no problems,” he said.
The AS/CMHI consortium were the sole bidders for the development of the Colombo port after fresh bids were called in early 2009 by the Sri Lanka Ports Authority (SLPA). The consortium and the government also reached an agreement on the financial bid of US$150 million as the net present value in October 2009.