Sri Lanka shipping line renegotiates loan for new ships

ECONOMYNEXT – Sri Lanka’s national carrier, Ceylon Shipping Corporation (CSC) is renegotiating a $70 million loan from People’s Bank taken to build two bulk carriers in China for which the former government allegedly overpaid.

CSC Chairman Shashi Dhanatunge said the line had started talks with the external resources department of the Treasury and state-owned People’s Bank to refinance the loan, with an initial agreement to pay only interest instalments for the moment.

“People’s Bank will examine our five-year business plan and then decide how to refinance the payments and re-schedule the loan,” he told “This has given us a breather.”

Ports and Shipping Minister Arjuna Ranatunga said the former regime had overpaid for the two ships, each with a dead weight of 63,000 metric tons, built by AVIC International Beijing Company Ltd. in China.

“When we took over the administration of the CSC, our biggest problem was how to repay the loan,” he said at a ceremony to mark the delivery of the second ship, Ceylon Princess, on Wednesday.

Dhanatunge said the CSC had offered to pay $3.6 million annually to People’s Bank, but the bank wanted $4.5 million.

The two ships were bought mainly to transport coal for the 900 MW Lakvijaya Thermal Power Station in Norochcholai on the north west coast, the contract for which the CSC has, and future coal power plants that had been planned.

But with the new government scrapping plans for a coal power plant in eastern Trincomalee, the CSC was seeking alternative charters for the two vessels, having already secured a few, Dhanatunge said.
(COLOMBO, Oct 07, 2016)

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