Jul 28, 2017

Agreement for tomorrow’s H’port port handover Featured

The agreement for the handover of Hambantota port to China Merchant Holdings will take place tomorrow (29), reports say.

The port was constructed with an investment of around Rs. 193 billion through commercial loans obtained by the government.

A framework agreement was executed on 08 December 2016, under which the port’s transactional value is 1.4 billion US dollars.

The signatories to the agreement were Hambantota International Port Services Co. (HIPS) and Hambantota International Port Group (HIPG).

HIPS will undertake port security, navigational services, pilotage, anchorage, provision of aid to navigation, dredging, widening, emergency responses and pollution control services.

The Sri Lanka Ports Authority will hold a 50.7 pc share in HIPS and China Merchant 49.3 pc.

In HIPG, the SLPA will hold 15pc of shares, and China Merchants 85pc, with the latter agreeing to sell a further 20 pc equity within a 10 year period to the former.

Terms of the concession agreement is 99 years, and the SLPA has the right to purchase all the shares upon expiry of 70 years or transfer of majority of 76.8 pc in the company HIPS and a share holding of 60 pc in the company HIPG to SLPA in 80 years at one US dollar.

A land area of 1,115 hectares has been identified to be leased out to the companies.

A further investment of around 600 million US dollars is required to equip the container terminal and to make the port fully operational.

The SLPA’s annual loan repayment commitment is around Rs. 9.1 billion.

Hambantota port commenced its commercial operations in November 2011 and as at end of 2016, its accumulated loss is over Rs. 46.7 billion.

If the car carriers which were forced to shift from Colombo port to Hambantota port are taken out, the number of ships handled in 2015 was 19 and in 2016 it was only 14 and from January to June this year, it is 10 ships.