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Hambantota project: Chinese firm holds back US$ 585m
Published Date: 10/06/2018 (Sunday)

By Bandula Sirimanna

CMPort wants to set up artificial entertainment zone, but SLPA says no

The Chinese company involved in the Hambantota Port project has put on hold the last tranche of US$ 585 million to Sri Lanka over a dispute involving infrastructure facilities.

The China Merchants Port Holdings Company (CMPort) Ltd is insisting that in accordance with the existing Concession Agreement, an artificial entertainment zone on reclaimed land is among the issues it wants resolved.

However, Sri Lanka Ports Authority (SLPA) Chairman Parakrama Dissanayake said the port area had been gazetted (under the SLPA Act) and would only be used for marine and port related activities. No land would be used for entertainment or tourism purposes, he said.
Until the issues are resolved, the money due to Sri Lanka in US dollars will lie at the CMPort’s Standard Charted Bank account, a source said yesterday. “It will only be transferred to the Central Bank after the issues in dispute are resolved.”

Ports Minister Mahinda Samarasinghe, when contacted for details of the disbursement of the last tranche, said he was unable to comment as he was in hospital.

SLPA Chairman Dissanayake said the money would be transferred to the SLPA account and transferred to Central Bank after meeting certain conditions in the agreement.

He noted that the whole Hambantota Port area had been gazetted under the SLPA Act and it would be utilised for marine and port related activities and no land would be used for entertainment or tourism purposes.

Declining to comment or clarify on the commitments or obligations relating to infrastructure that has to be fulfilled by the Government, he said that no artificial land in the port area would be earmarked for entertainment or tourism purposes.

He said no permission would be given to any party to set up casinos or introduce tourism-related activities as the whole area has been declared for port and marine-related activities.

Several rounds of talks were held between top Finance Ministry officials, relevant ministries, state agencies and CMPort representatives to arrive at an amicable settlement on conditions that are to be fulfilled by all parties to the agreement recently without much progress, a senior official involved in the discussions said.

He disclosed that according to the concession agreement, “The parties agreed the Company shall not be required to pay (by itself or through its affiliates) Tranche 3 of the consideration under the Concession Agreement until all of the original conditions precedent have been fulfilled or waived by parties signatories to the agreement”.

Therefore, he pointed out, it is essential to arrive at a settlement on the fulfillment of conditions through consultation, compromise and consensus without dragging the issues as the country could not afford to lose much needed foreign exchange.

“Objections have been raised against the unusual structure of the deal where infrastructure including breakwater, utilities and the islands are handed over to a third-party operator instead of the port agency as landlord only leasing out terminal and revenue generating sections, as is the international practice’, he added.

Once the land reclamation has been completed, the President would have to officially include the Port premises in the Sri Lankan territory and vest it in the relevant local authority making a declaration in special gazette notification, a senior legal official said.

Source: The Sunday Times

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