SLPA, CHINA MERCHANTS TO ESTABLISH TWO LIMITED LIABILITY COMPANIES

Hambantota Port Agreement:

The Sri Lanka Ports Authority (SLPA) and China Merchants Port Holdings Company Limited will establish two limited liability companies to develop and manage the Hambantota Port as per the draft of the agreement tabled in Parliament by Ports Minister Mahinda Samarasinghe yesterday.

Accordingly, the SLPA will have a 51 per cent stake in one company and 15 in the other. However, as per the amended agreement, the SLPA can claim a further 20 per cent to increase its stake on the second company in ten years.

The two companies will be capitalised to a cumulative value of US$ 1.4 billion, and will transfer assets of the Hambantota Port including a man-made island.the SLPA will get the opportunity of purchasing total equity of both companies after several decades.

Meanwhile, China Merchants is expected to invest a sum of US$ 1.12 billion in marine related activities in the Hambantota Port.

However, a strict clause is incorporated prohibiting the use of Hambantota Port property or surrounding areas in any military activity whatsoever; whether in land, air or sea.

As per the agreement, the use of the port property and the common user facilities shall be strictly dedicated for the purpose of the port and marine related commercial and development activities.there is a strict prohibition on carrying out any non-port and nonmarine related commercial activity and activities involving military personnel or military nature.according to the agreement, Sri Lanka will have the sole authority over such exercises.

It will also be given the sole authority to grant requisite permission, clearance and approval for bringing in or berthing warships, submarines or storing, warehousing of any military equipment and machinery, installation of communication networks or facilities.

The government will also hold the right to establish its own level of domestic environmental and other protections, and its own sustainable development laws, policies and priorities, and submit its commitments in occurrence with and subject to the rules of international law, treaties and conventions.