The final payment of US$ 580 million, for the Hambantota Port joint venture, is expected to be paid by China Merchants Port Holdings Company on 9 May, Minister of Ports and Shipping, Mahinda Samarasighe said.
Speaking at the annual awards ceremony of the Institute of Chartered Shipbrokers, Samarasignhe said in addition to the US$ 1.12 billion which will come in, just for this year,……the China Merchants Port Holdings Company has earmarked 160 million US Dollars for infrastructure development in 2018, and US$ 600 million for the next five years for the Port to be fully operational.
Moreover, he said, with the receipt of the US$ 580 million, an additional US$146 million will come on the same day and will be ‘parked’ in an account in Sri Lanka until the Government of Sri Lanka and China Merchants Port Holdings Company take a decision on how to use this money towards infrastructure needed by the Hambantota port.
He said, once the port is operational, both companies, Hambantota International Port Group(HIPG) and Hambantota International Port Services(HIPS) could generate revenue which will benefit the Sri Lanka Ports Authority(SLPA) as its equity shareholding.
“US$ 1.5 billion was spent to construct only two phases of the Hambantota Port, and the SLPA had to take the entire burden of retiring this debt. Before the joint venture took place we had used approximatelyUS$250 million out of SLPA funds, to retire the debt. Our debt payment from this US$ 1.5 billion construction in 2021 would have been Rs 20 billion. Here we are satisfied with the profit before tax (PBT) of Rs. 13.2 Billion for financial year ending December 2017, otherwise the SLPA would have to close shop. The Treasury will now take over the balance remaining debt burden.” Samarasignhe said.
He said most of the conditions of the joint venture were fulfilled and the FDI benefit will strengthen the economy further and contribute to the sustainable development efforts that the Government is trying out.
This is the largest ever FDI which is USD 1.12 billion, while China Merchants Port Holdings Company is the second largest Port operator in the world.
The Government completed the formal handover of the strategic port of Hambantota to China after accepting the first tranche of US$ 292.1 million in December last year.The second tranche of USD 97.365 million was paid in January, 2018. China Merchant Port Holdings will take control of the facility on a 99-year lease and will develop, manage and operate the Port with a stake of 85%.8