Hambantota port control to revert to Sri Lanka after 80-years for one dollar
Aug 09, 2018 08:53 AM GMT+0530 | 0 Comment(s)
ECONOMYNEXT - Sri Lanka will regain a majority stake in the terminal company at Hambantota port from China after 80-years for one dollar and the port will pay standard royalties on containers and bulk cargo after 25-years, details tabled in parliament showed.
There is also an option to buy the entire port back after the 70-years, the shipping minister said, filing answers to a parliamentary question.
Under a deal agreed with China's CM Ports, a company called Hambantota International Port Group (HIPG), will build and operate container and an existing bulk terminal at the port.
CM Ports will have a 85 percent stake in the firm and Sri Lanka Ports Authority 15 percent.
After 10-years Sri Lanka will have an option to buy back a 20 percent stake, under a concession agreement now in force.
After 70 years Sri Lanka could completely buyout China. The details of how the price would be arrived at were not given in parliament.
If the options are not exercised at 80 years, a 40 percent stake in HIPG will come to Sri Lanka at a nominal cost of one US dollar. The duration of the balance concession period was not given.
HIPG will pay nominal royalties of 100,000 US dollars in the first 5 years, 200,000 dollars for the next 5 years, and 300,000 dollars from year 11 to year 14.
From year 15 to 20, 400,000 dollars will be paid and from year 21 to 25, 500,000 US dollars a year would be paid.
After 25 years, royalties of 2.25 US dollars per container will be paid to Sri Lanka. For break-build cargo 10 rupees a tonne will be paid, which will escalate at the rate of 3 percent a year.
Common user facilities at the port such as piloting and anchorage will be provided by another firm Hambantota International Port Services, in which Sri Lanka Ports Authority has a 42 percent stake and HIPG a 58 percent stake.
For the 85 percent stake in HIPG, CM Ports had paid Sri Lanka 973.68 million US dollars. Sri Lanka had borrowed about 1.4 billion US dollars, the bulk of it from China to build the port.
HIPG has to invest more to put up cranes and other infrastructure at the port. (Colombo/Aug09/2018)