Diplomacy: China declines Lanka’s request

Converting loans into equity: Beijing wants talks with investors on commercial terms

( July 31, 2016, Colombo, Sri Lanka Guardian) China has declined Sri Lanka’s request to convert into equity Beijing-funded projects including the Mattala Airport and the Hambantota Port, The Sunday Times in Colombo reported today.

Report by the Sunday Times, a Colombo based  weekly  reads as follows;

“China’s Ambassador Yi Xianliang told Prime Minister Ranil Wickremesinghe that it was not possible according to China’s laws. He said it should be done through discussions with investors on commercial terms.

The latest request was made by Premier Wickremesinghe to Ambassador Yi at a recent meeting of the Cabinet Committee on Economic Management (CCEM). He was in attendance.

However, the Chinese envoy had said that his Government was willing to extend its “fullest cooperation on this matter and support to overcome the current financial issues of Sri Lanka.” Already, China has recommended a list of its leading companies for tie-ups with the Mattala Airport, Hambantota Port and other key ventures in Hambantota.

The move comes as the Government prepared to set up a Hambantota Development Corporation to coordinate the development of this southern district. On the recommendations of Development Strategies and International Trade Minister Malik Samarawickrema, a committee is to be named to draft the necessary laws for the establishment of this Corporation.

The committee is also to be tasked to prepare a Cabinet memorandum for this purpose.

Another major Chinese aided project, the Colombo Port City development is expected to get under way by October. The Government has set August 15 as the tentative date for the signing of a tripartite agreement. 

Details of the new measures appear in the Political Commentary on Pages 12 and 13. Premier Wickremesinghe had explained to Ambassador Yi that there was an urgent need to start the budgetary process for the coming year. Since a major portion of the Government’s recurrent expenditure is the Chinese loan component, he had said it was necessary to finalise the debt amount which could be converted to equity without delay.

With regard to many other projects which the Government has identified to be transferred into equity, the Government has decided to call for proposals worldwide. It will also call for proposals from Chinese companies and conduct direct talks. The selections will be made in consultation with Colombo and Beijing.