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Thursday April 18th, 2024

Chinese firm resumes talks over Hambantota investment zone – Minister

ECONOMYNEXT –China Harbour Engineering Company Ltd (CHEC), a subsidiary of state-run China Communications Construction Company (CCCC)Limited, has resumed talks over an investment zone promised by the Sri Lanka government in Hambantota, State Investment Minister Dilum Amunugama said.

The Sri Lankan government has promised 15,000 acres (6,070 hectares) of land in an industrial zone next to Hambantota Port which is under the control of the Chinese firm.

The zone is in the southern district of Hambantota, where China has already built a $1.5 billion port and airport, part of the island nation’s ambitious post-war economic revival plans.

According to the original plan, China was expected to invest $5 billion during the first five years and create 100,000 jobs.

However, politically-motivated protests against the investment zone being given to China, Easter Sunday attacks followed by the COVID-19 pandemic and economic crisis has slowed down the investment zone and related investments.

After the protests, the previous government led by Maithripala Sirisena agreed to provide 10,000 acres from Hambantota next to the port, instead of 15,000 and another 5,000 acres from adjacent Monaragala district.

“With the Covid and the recession, they (CHEC) also put it on hold,” Minister Amunugama told reporters in Colombo at a media briefing on Friday (13).

“Now again they came and reengaged.  They spoke with us about whether they could start this. So, I have appointed a committee with two people from CHEC.  My DG (director general) from BOI (Board of Investment), and also additional secretary from the ministry to reassess how much of land we have and where that land is and also for CHEC to decide how much of land they want and from where.”

CHEC appointed Singapore-based Surbana Jurong to draw up the plans for the first two phases of the zone which will include social infrastructure such as housing and schools.

The zone is next to the port in which China Merchants Port Holdings Company Ltd is granted an 85 percent stake on a 99-year lease for $1.12 billion.

“If the discussions are a success, then we can decide where the new zone is going to be,” Amunugama said.

China’s interest in the port has been part of its ambitious “Maritime Silk Route” to the oil-rich Middle East and onward to Europe. (Colombo/Oct 16/2023)

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Sri Lanka’s discussions with bondholders constructive: State finance minister

ECONOMYNEXT – Sri Lankan authorities continue to engage all debt restructuring negotiations in good faith, within principles of equitable treatment among creditors, and with maximum transparency within the norms of such negotiations, State Minister of Finance, Shehan Semasinghe has said.

“It is standard practice, when a representative group of bondholders is formed, to entertain confidential discussions with such group and its appointed advisors. In the case of Sri Lanka, the Ad Hoc Group of Bondholders represents holders controlling more than 50% of the bonds, which make them a privileged interlocutor for Sri Lanka,” Semasinghe said on X (twitter).

“It is well understood that given the price sensitive nature of the negotiations, and according to market regulations, discussions with the Group and its advisors are to be conducted under non-disclosure agreements. This evidently restricts the ability of the Government to unilaterally report about the substance of the discussions.

“The cleansing statement, which was issued on the 16th of April, at the conclusion of this first round of confidential discussions with members of the Group, aims at informing the Sri Lankan people, market participants and other stakeholders to this debt restructuring exercise, about the progress in negotiations. It provides the highest possible level of transparency within the internationally accepted practices in such circumstances.

“As informed in this statement, confidential discussions held in recent weeks with bondholders’ representatives proved constructive, building on the restructuring proposals presented by both parties. During the talks both sides successfully bridged a number of technical issues enabling important progress to be made. Sri Lanka articulated key remaining concerns that need to be addressed in a satisfactory manner.

“The next steps would entail further consultation with the IMF staff regarding assessments of the compatibility of the latest proposals with program parameters. Following these consultations, we hope to continue discussions with the bondholders with a view to reaching common ground ahead of the IMF board consideration of the second review of Sri Lanka’s EFF program.”

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Sri Lanka rupee weakens at 301.00/302.05 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 301.00/302.05 to the US dollar in the spot forex market on Tuesday, from 299.00/10 on Tuesday, dealers said. Bond yields were broadly steady.

A bond maturing on 15.12.2026 closed stable at 11.30/35 percent.

A bond maturing on 15.09.2027 closed at 11.90/12.05 percent up from 11.95/12.00 percent.

A bond maturing on 15.12.2028 closed at 12.10/20 percent down from 12.10/15 percent.

A bond maturing on 15.07.2029 closed at 12.25/40 percent.

A bond maturing on 15.03.2031 closed at 12.30/50 percent. (Colombo/Apr17/2024)

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Sri Lanka Treasury Bill yields down across maturities

ECONOMYNEXT – Sri Lanka’s Treasuries yields were down across maturities at Wednesday’s auction with the 3-month yield moving down 7 basis points to 10.03 percent, data from the state debt office showed.

The debt office sold all 30 billion rupees of 3-month bills offered.

The 6-month yield fell 5 basis points to 10.22 percent, with 25 billion rupees of bills offered and 29.98 billion rupees sold.

The 12-month yield dropped 4 basis points to 10.23 percent with 18.01 billion rupees of bills sold after offering 23 billion rupees. (Colombo/Apr17/2024)

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