Hambantota Port Agreement to be tabled in Parliament

The concession agreement on the Hambantota Port between Sri Lanka Ports Authority (SLPA) and China Merchants Holdings Company (CMHC) Ltd will be tabled in Parliament today (July 26) and debated on Friday, with the Government hoping to formarllly sign the deal on Saturday, it was revealed today.

Minister of Ports and Shipping, Mahinda Samarasinghe told journalists this afternoon that the deal was a "win-win situation" for both sides, He was speaking after Cabinet approved the new agreement earlier in the day. 

While there won't be a formal vote in Parliament on the deal at the end of the debate, the Minister said the Government hoped to still incorporate any useful suggestions from MPs into the new deal. Although, this may mean that the signing of the deal may get pushed back a little bit, he acknowledged. 

The Minister said the agreement was an improvement on the earlier agreement where the Chinese side would have got an 80 per cent stake in the port.  

Under the new agreement, the SLPA's state would rise to 30 per cent while CMHC will hold 70 per cent.

The agreement would see the setting up of two Sri Lankan companies to carry out operations of the port. They are the Hambantota International Port Services Co. (Pvt) Ltd (HIPS) and Hambantota International Port Group (Pvt) Ltd (HIPG). The SLPA will hold a share of 50.7% and CMHC 49.3% in HIPS while the share allocation of HIPG would be 85% to CMHC and 15% to SLPA. Accordingly all immovable and movable properties will be transferred to these companies. 

The agreed investment value of the deal is USD 1.12 billion. 

Under the new agreement, the sole responsibility and authority in terms of national security will be with the Sri Lankan Government, 

Minister Samarasinghe pointed out that the the SLPA had to annually set aside Rs.9.1 billion to pay off the loans taken to build the port, which was built at a cost of Rs.193 billion (USD 1.5 billion) and that it could not afford to keep maintaining the port and paying off its loans. 

Hambantota Port commenced its commercial operations from November 2011 and as at end of 2016, had accumulated a loss of over Rs.46.7 billion, it was further disclosed. 

Following are highlights of the new deal for the Hambantota Port as released by the Ministry of Ports and Shipping: 

 

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