Minutes of Cabinet Committee
Here is the full text of the minutes of the meeting of the Cabinet Committee on Economic Management (CCEM):
“Decision
HE the Ambassador for China who was present in the discussion was briefed by the chair that there is a requirement of converting the existing debt of completed Chinese funded projects such as Hambantota Port, Mattala Airport and other projects funded by China into equity with a view to having more space for obtaining loans from China. HE the Ambassador of China explained that according to the existing Chinese law it is not possible to convert the debt directly into equity and it has to be done through discussions with investors on commercial terms. (Emphasis ours) It was further mentioned that the Chinese Government is willing to extend its fullest co-operation on this matter and support to overcome the current financial issues of Sri Lanka.
It was further explained that there is an urgent need to start the budgetary process for the coming year and since the major portion of Government’s recurrent expenditure is the Chinese loan instalment component, it is necessary to finalize the debt amount which can be converted into equity without a delay. Many Chinese investors have already responded to this requirement of the SL Government and submitted their investment proposals for some of the completed projects mentioned above. The following options were proposed to select suitable investors for projects which have been identified to be transferred into equity. To call for proposals worldwide To call for proposals from the Chinese companies To conduct direct negotiations with the Chinese companies, selected jointly by the Sri Lanka and Chinese Governments. Approval was granted to submit the draft Cabinet Memoranda on the following matters to the Cabinet for its approval after incorporating the amendments proposed above. Commercial issues Policy, Administrative and Legal issues Withdrawal of compensation claims by Colombo Port City Project Company. Instructions were given to take necessary action to sign the tripartite agreement after taking Cabinet approval and conduct further negotiations after commencing the project.