Controversy brews over Hong Kong length lease of Sri Lanka port to China: report
ECONOMYNEXT – Sri Lanka’s Ports Minister Arjuna Ranatunga had objected to a proposed 99-lease of Hambantota port to China, questioning its legality and asked for a standard privatisation deal based on a conventional concession agreement, a media report said.
Sri Lanka’s Prime Minister Ranil Wickremesinghe had said 80 percent of the Hambantota Port would be sold to China for a $1 billion upfront fee, and later said it would be based on a lease.
Reports had mentioned the length of a 99-year lease, the same length under which Hong Kong was handed over to the British Empire under the Second Convention of Peking free of rent.
Sri Lanka’s The Sunday Times newspaper said Ports Minister Arjuna Ranatunga and his Deputy Nishantha Muthuhettigama had objected to the plan, saying in Colombo port, space had been given to private parties to develop on a concession agreement of around 35 years.
Space in government-owned ports are usually given to private parties based on a long-term ‘concession agreement’ running into 30 or 40 years where the firms will build-operate-transfer (BOT) the infrastructure back to the port agency.
During the period of operation, fees in the form of a ground rent combined with a volume of use is paid to the owning port agency, which is the ‘landlord’.
The privatisation of two container terminals through such BOT deals have been lucrative to SLPA, bringing most of its profits each year.
The Ports Minister had warned that, unlike in Colombo, Sri Lanka was now planning to get some money upfront and hand over control of an entire port, which was already built by taking it out of Sri Lanka Ports Authority, the state-run firm that owns major ports and placing it a separate company.
While a figure of $1 billion had been mentioned as an upfront fee, the SLPA had already spent over $1.4 billion building the port, the report said.
The type of transaction envisaged may be against the underlying law of the SLPA, and its governing act may have to be amended, the government said.
The Ports Ministers had also raised ‘national security’ concerns, the report said.
Many countries are restricting investment by Chinese firms in sensitive areas, because the firms are not capitalist private companies, which are purely concerned with profits, but are Mercantilist state-connected or fully state enterprises which may or may not have other agendas. (Colombo/Nov21/2016)