Leasing “white elephant” Hambantota Port helped ease debt burden: Ranil
ECONOMYNEXT – By leasing the “white elephant” Hambantota Port to China, the Yahapalana Government was able to free the people of Sri Lanka from the burden of debt owed to China, a burden too heavy for them to bear, Former Prime Minister Ranil Wickremesinghe said.
“Ships didn’t call at the Hambantota port. Investments for factories that were anticipated to flow into Hambantota did not arrive. We did not have an income from the port to pay installments and the interest due and could not expect to make a profit from the port for at least 30-40 years,” Wickramasinghe told the privately owned Sirasa TV yesterday.
The former premier defended the lease, arguing that it wasn’t an outright sale the way the Colombo Port City area and the plot of land that Shangri-la Hotel is built on were sold in a total transfer of their ownership.
“I did not opt for such a sale, but we needed to commercialise the Hambantota port let in foreign investment,” he added.
The USD 1.3 bn Hambantota Magampura Mahinda Rajapaksa Harbour was opened initially in 2010 using debt from China, 85% of which was funded through the EXIM Bank of China.
In 2016, the Sri Lankan government struck a deal to sell an 80% stake in the port to the state-controlled China Merchants Port Holdings. But that agreement sparked protests from unions and opposition groups, forcing the government to renegotiate it.
Under the new plan, the Chinese company was given a 70% stake in a joint venture with the Sri Lanka Ports Authority.
Wickremesinghe said Sri Lanka can manage with just the Colombo harbour for the goods required for the country and since 75% of the work at Colombo harbour is used especially for transshipments sent to India.
“Those days they said that ships will come to the Hambantota port for refuelling but no such ship arrived. For example, just because you buy land along Galle Road and open a fuel station that does not mean every vehicle will come there to refuel. This was actually a white elephant,” he said.
The former PM said that he told the Chinese government that Sri Lanka could not repay the debt.
“Then the Chinese government asked if we were selling it, and if the first opportunity would be given to a Chinese company. There was no other company willing to buy the port as most of them didn’t know what to do with it. China came forward to purchase the harbour because they had a plan for it,” he said.
The Chinese government intended to bring their factories and to send those goods through the Hambantota port and make it an economic hub, said Wickremesinghe, adding that they already had a general plan to open several harbours and industrial zones in the Indian ocean and make Hambantota the main harbour by including it in that plan.
“But we knew and they knew – and indeed everyone else knew – that they would not be able to make any profit from that harbour for at least 30 years,” he said.
Eventually, he further said, a Chinese state owned company asked for the harbour for 99 years, so the Sri Lankan government agreed to it since it would take 30 years to make profits out of it.
“But we could take it back even in the first year even though we had leased it for 99 years if we paid them the compensation,” he added. (Colombo/Jul30/2020)