China Merchant Port Holdings Ltd will pay the final tranche of US$ 585 Million for the Hambantota Port this week.
Chairman of the Sri Lanka Ports Authority, Dr. Parakrama Dissanayake while confirming to Ceylon FT yesterday that the final tranche of US $ 585 Million would be paid by China Merchant Port Holdings Ltd this week, also debunked news stories both in the local and foreign Media that China Merchant Port Holdings Ltd had withheld the final tranche of US $ 585 Million until the Government approved the construction of an entertainment zone within the premises of the Hambantota Port.
Nowhere in the Concessionary Agreement which was signed between the Government and China Merchant Port Holdings on 11 December 2017 does it state that there was a clause for the construction of an entertainment zone which is strictly outside the ambit of CM Port Holdings Ltd , Dr. Dissanayake told Ceylon FT.
The Agreement is clear that there will be no other activities other than port and marine-related activities within the Hambantota Port and China Merchant Port being the second largest port operator in the world, will not digress from its core business, he explained.
China Merchant Port has also not made a request from the GOSL for the use of any infrastructure within the Hambantota Port for an entertainment zone as they are not in that business, he said.
This follows the Government signing the concessionary agreement on 11 December 2017 with Hambantota International Port Group (HIPG) and Hambantota International Port Services (HIPS), two new companies set up by the China Merchants Port Holdings Company and the Sri Lanka Ports Authority.
The ceremony marked the start of HIPG and HIPS-managed operations in the Hambantota Port.
Earlier in July 2017, China Merchants Port Holdings Company agreed to pay $1.12 Billion for an 85 per cent share in Hambantota Port on a 99-year lease. On 11 December 2017, China Merchants Port Holdings Company made a first installment payment to the Sri Lankan Government for control of the port.
According to the Ministry of Ports and Shipping, the first payment represented 30 per cent of $974 million, with the Chinese side investing an additional $146 million directly in Sri Lanka.
China Merchant Port Holdings (CM Port) made the payment of $ 97.365 Million to the Sri Lanka Ports Authority (SLPA) as the second tranche of its investment in the Public-Private Partnership (PPP) on 15 January 2018 where China Merchant Port Holdings Ltd marked the payment of $ 97.365 Million to the Sri Lanka Ports Authority (SLPA) as the second tranche of its investment in the Public-Private Partnership (PPP).
The payment in January took the total paid by CM Port to $ 389.462 Million. The final payment was to be paid within six months of 9 December 2017. “There was no delay on the part of the Chinese and the payments are on course, he said.
However, news reports in the local Media and the Press Trust of India last week stated that China had withheld the Hambantota Port deal’s final tranche of USD 585 million to Sri Lanka due to Colombo’s objection over its plan to use a man-made island for entertainment purposes.
In December last year, Sri Lanka handed over the control of the southern sea port of Hambantota to China on a 99-year lease for USD 1.12 billion, amid concerns over Beijing’s efforts to expand influence in the region.
The Press Trust of India reported that the last tranche of USD 585 million had been held back by China’s state-owned China Merchants Port Holdings which want the land to be used for entertainment purpose.
However, SLPA insisted that the facilities in Hambantota should only be used for marine and port-related activities and not for entertainment and tourism purposes, the report said.
It quoted the Chinese firm as saying that the money would only be transferred after the issue is resolved.Meanwhile, Deputy Secretary to the Treasury, Sajith Attygalle told Ceylon FT yesterday that the US $ 585 Million would be maintained in a Treasury Account in the Central Bank which at the moment would boost foreign reserves.
“There is no plan to spend the money right now but it will be used at a future date for the repayment of loans and debt. We have to manage the funds like that”, he said.
Responding to a question as to what the Treasury response to the dwindling rupee which is now Rs 161 to the Dollar and amid speculation that it might be Rs 165 and
Rs 170 by the end of the 2018, he said the Government and the Central Bank could not intervene just like that.
“If there were huge fluctuations, the Central Bank is likely to intervene but the best option was for the market to regulate itself”, he noted.