Pay hike seen hitting Sri Lanka Ports Authority profit
ECONOMYNEXT – A pay hike demanded by stevedores unions at Colombo port after the Sri Lanka Ports Authority (SLPA) reported a big profit could erode future earnings, the Finance Ministry has said.
The SLPA reported a profit of Rs13.3 billion in 2017, its highest ever net profit.
The main contributor to the profit has been the exchange gain from the removal of loans obtained by SLPA to build the southern Hambantota port, the finance ministry said in a report.
Sri Lanka has given the port built by Chinese firms with Chinese loans on a 99-year lease to state-controlled China Merchants Port Holdings for $1.12 billion in a debt-for-equity deal.
Hambantota port failed to generate enough business to repay loans and its losses had been a burden on the SLPA.
The finance ministry said the government has undertaken to service the loans obtained for building Hambantota port from China Exim Bank and Bank of Ceylon.
“Based on the thumping profit made by SLPA, unions have demanded a salary hike,” the report said.
The SLPA has signed a collective agreement with unions for the 2018-2020 period which will add Rs. 2 billion in salary cost to the ports authority, it said.
“The quantum of salary hike may definitely hit the bottom line profit of SLPA during the agreed three-year period of SCI,” the report said, referring to the statement of corporate intent agreed to by state-owned businesses like the SLPA aimed at improving their performance.
The report said two tranches of Hambanttota port’s sales proceeds amounting to US$974 million and $146 million had been received in first quarter of the year 2018. A third and final tranche of US$584 million was paid in June.
This followed the execution of lease agreements with the Sri Lanka Navy and Ceylon Electricity Board for land occupied by them within the leased area in Hambantota port and handing over of an oil tank farm.
(COLOMBO, July 05, 2018)