Hambantota port deal signed; minority stake for SLPA in both new companies

The Concession Agreement for the controversial Rs. 193 billion Hambantota Port, the legally binding document for what is being promoted as a public-private partnership, was signed yesterday.

The event at the Ports and Shipping Ministry was telecast live over the UNPcontrolled state run Independent Television Network ( ITN). Ministry Secretary L.P. Jayampathy and Sri Lanka Ports Authority ( SLPA) Chairman Parakrama Dissanayake signed on behalf of the Government while Vice Chairman Bai Jingtao signed for China Merchants Port Holdings Company Ltd.

The highlight of the Agreement is the setting up of two separate companies – HIPG (Hambantota International Port Group (Pvt.) Ltd.),

PLEASE SEE POLITICAL COMMENTARY ON PAGES 14 AND 15 FOR ADDITIONAL

which will oversee commercial o p e r at i o n s and HIPS ( Hambantota International Port Services ( Pvt.) Ltd) to oversee Common User Facilities ( CUF), including security operations.

In the port operator company HIPG, CMPort ( the Chinese company) will have a majority stake (85%) and the SLPA will have a minority stake ( 15%). The CUF Company – HIPS, the SLPA will have 42% and the HIPG 58% of the stake. Thus, the SLPA is a minority shareholder in both these companies.

After last Tuesday’s Cabinet meeting where Minister Samarasinghe’s memorandum was approved, a news release was issued on Wednesday. Both the Minister’s memorandum and the news release create the understanding that the SLPA has the majority stakes in HIPS. It states the SLPA will have 50.7 percent of the shares and CMPort 49.3 percent.

Corporate Analysts, however, pointed out, that the SLPA’s 50.7 per cent is made up of 8.7 percent stake in HIPS shares is not direct, but is represented through HIPG in a convoluted share-structure.

The Agreement, which is a legally binding document, states that “initial equity share capital to be comprised of 42% to be held by the SLPA and 58% to be held by the HIPG operator.” The document signed yesterday does not mention SLPA’s 8.7 percent stake to be held separately in HIPS. Instead, it says the HIPG would hold 58% stake in HIPS.

Analysts point out to the widely regarded commercial practice, in a corporate set up, that a majority shareholder decides the policies as well as controls the day- to- day decision making. The CMPort has a controlling stake in the HIPG, so all decisions of HIPG would be the decisions of the CMPort. The minority shareholding becomes irrelevant since they can be voted out.

Among the ministers who attended yesterday’s ceremony were Malik Samarawickrema, Sarath Amunugama, Mangala Samaraweera and Mahinda Samarasinghe. China’s envoy Yi Xianliang was also present.

Minister Samarasinghe claimed that further changes in the Agreement could be made even after yesterday’s signing. He said the document would now go before the Cabinet for endorsement and would be tabled in Parliament thereafter. Earlier, President Maithripala Sirisena had said that the Concession Agreement would be signed only after Parliament debated the deal.

According to the news release issued by the Ministry of Ports and Shipping, the Hambantota Port which began commercial operations in November 2011 has an accumulated loss of Rs. 46.7 billion and that from January this year it has handled only 10 ships if the car carriers which were forced to unload at the port instead of the Colombo Port are taken off.

The land area that will be gazetted to be leased out to companies wanting to invest around the Hambantota Port will be 1,115 hectares (and not 1,574 hectares), adds the release.

The release also states, “The sole responsibility and authority in relation to National Security is with the Government of Sri Lanka).

(Please see Political Commentary on Pages 14 and 15 for additional

details).

CARVALHO - STANLEY, Beloved son of Bernadette and late John Louis Carvalho, brother of Jennifer Corera, husband of Dalal and father of Jean Paul (USA), John Louis (Melbourne), Karina ( UK) Passed away peacefully in Perth, Australia on July 26, 2017 after brief illness. No. 212, Wharf Street, Queens Park WA, Australia 6107 STM 503371

VERNA - JAYASUNDERA ( nee CABRAAL) (USA). Beloved wife of the late Dr. Joe Jayasundera, loving mother of Dr. Ymitri, Kshanaka, and Ynoli, motherin-law of Craig, Dr. Menaka, and James, stepmother of Nilkamal and the late Niranjan, much loved grandmother of Anjuli and Nevin, Ananthi and Anesh, and Kulanath, grandmother- in- law of Romesha, great-grandmother of Anissa (all in USA), daughter of the late Wilfred and Leonora Cabraal of Kelaniya, sister of the late Dr. Leslie, Dr. Shelton, Stanley, Mervyn, Patrick and of Douglas, Edgar, the late Dr. Phyllis, Basil, Terrance, and Bernadette (USA). Rosary and Visitation will be on July 30th at 1pm at Mission Park Funeral Home, 3401 Cherry Ridge Drive, San Antonio, TX 78230 ( 210- 3491414). Holy Mass will be held at St. Matthews Church on Monday, July 31st at 10 am followed by burial at Mission Park Cemetery in San Antonio, Texas USA. STM501905.

WIJESINGHE - RITA nee FONSEKA. Beloved wife of late Frank, loving mother of Srimathy and Carmelo, mother-in-law of Tilak Selviah and Panduka Weerasekera, loving grandmother of Kiara. Funeral was held on Friday, July 14, 2017. Email: srimathy11@hotmail.com STM 486220.

WIJETILLEKE - KHD Wijetilleke - Beloved husband of late Bandu, loving father of late Kingsley, Princy, Dulath (USA), Lakshmi (Australia), Kumudini, late Major General Jagath, and father-inlaw of Kithsiri, Geeta, Jayamini (USA), Sunil ( Australia), Ajith ( Maga Engineering) and Anusha, has passed away and the remains are now lying at Jayaratne Funeral Parlour in Borella. Cremation on Sunday 30th July at 4.00 pm at Borella Kanatte Cemetery. STM 503384.

RAJAPAKSE – DOLLINA, Daughter of the late Mr. & Mrs.P.S.Wedamuttu of Galle, wife of Jayanath Rajapakse, Mother of Ruana, Sister of the Late Arul, Late Ley. Late Freddy, Late Dr. Winnie and Pauline, Henrietta and Amy (All of Canada), Sisterin-Law of Yvonne, Merle, Sylvia and Rita. Passed Away on the 25th July 2017. A Private Crematon was held in accordance with her wishes.

THE Family of late Milroy Joseph Alles sincerely thank all relatives friends neighbours and clergy who visited our home and attended the funeral sent messages of condolences floral tributes and assisted in numerous ways during this time of grief. We regret our inability to thank individually. 410, Negombo Road, Kandana. STM 491791