China demands control of H’tota Port

By Sulochana Ramiah Mohan-2017-04-09

The government appears to be in hot water these days as the Chinese have demanded the complete handover of the Hambantota Port to the China Merchants Port Holdings Company, without the Sri Lanka Ports Authority (SLPA) having any stake in it. The Chinese, on seeing the new amendments put forward by the SLPA urging them to reduce the 99-year lease plan to a 33-year lease, are also in a quandary as to whether they should release the US$ 1.2 billion loan, obtained by the former government, in full or to give it in instalments, Ceylon Today learns.

It is also learnt that the top Chinese official, Chairman of the National Committee of the Chinese People's Political Consultative Conference, Yu Zhengsheng, who is also a member of the CPC Politburo Standing Committee, the most powerful decision-making body in China, had arrived in Sri Lanka (6 to 8 April 2017), to put pressure on Sri Lanka to embark on the Hambantota Port project soon. The government, which was initially firm in going forward with the project, is now in two minds as the Chinese have demanded the complete control over the Hambantota Port.

The Committee appointed by President Maithripala Sirisena, to review the implementation of the project, has come to some sort of an understanding on the principal terms that were already being agreed upon.

"China is pressurising to get going with the project and the government needs the money to boost the country economically," reliable sources informed Ceylon Today.

A reliable source said China had said if there were variations in the terms agreed upon in the original agreement then they will also release the US$ 1.2 billion loan not at once but in instalments.

Minister of Ports Arjuna Ranatunga had given his submission pointing out the terms and conditions the Government had said they would like to take forward to the project, and willing to discuss further on the crucial terms tabled by the Chinese.

The government has requested the Chinese to agree to a 33-year lease plan instead of a 99-year plan and to also jointly review the progress every five years or so.

The government has been clear that two different authorities cannot run the Hambantota Port and the Colombo Port, but the Chinese have said they would want it run separately.

The Government has said they would want to take charge of the port. The security, bunkering, piloting and collecting port charges to come under one body, that is the Ports Authority, while the Chinese have refused the deal, the sources said.

"If that comes into play there would be two separate authorities in Sri Lanka running the maritime affairs," sources added. The initial deal on the revenue was that Sri Lanka would have a 20% stake and the Chinese would collect the majority 80%. However, the SLPA has now said they would want 40% of the profit and the Chinese to take the balance 60%.

The visit of Yu Zhengsheng is considered the visit of the highest ranking Chinese official next to Chinese President Xi Jinping's State visit to Sri Lanka.

Apparently, Zhengsheng has come to execute the contract, the reliable sources said.

When Ceylon Today contacted the Chinese Embassy to get more information on the VIP's visit, they said it's a high level meeting and cannot disclose further information.

The current Government is unable to pay back the US$ 1.2 billion loan the Rajapaksa Government obtained from the Chinese, hence the Chinese have come up with a deal to pay back the money with a favour of asking the Southern Port on a 99-year lease.

According to sources, the government audit shows that the entire Hambantota Port Project did not cost US$ 1.2 billion, but around US$ 800 million had been 'played out' and the cost of the project does not include the land value and that was mere sacrifice by the former government, it was revealed.