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By Chathuri Dissanayake
A buoyant Ports Minister yesterday outlined plans to anchor the Hambantota Port deal, which is already before the Attorney General, in the next 10 days and use the debt reduction to upgrade and expand the Colombo Port to increase returns after it nearly doubled profits to Rs. 11 billion last year.
Ports Minister Arjuna Ranatunga told reporters that plans to establish the East Container Terminal and improve the State-run Jaya Terminal had to be put on hold as the Government struggles with crippling loan payments for the Hambantota harbour. Once the agreement is signed with China Merchants Holdings the Government will divert funds to upgrade the Colombo Port.
However, the Minister hinted that the Government’s initial plan to hand over 80% of Hambantota Port shares to the Chinese company is likely to be pared down to give a better deal to the Sri Lanka Ports Authority (SLPA) and allow it to control port security.
“We have proposed several changes (to the original draft agreement) and we will end up with a situation which is far more favourable to the institution,” Ranatunga said.
SLPA also made a Rs. 11 billion profit during 2016, and is now drawing up blueprints to carry out upgrades of both the Jaya and East terminals at the Colombo Port.
Ranatunga also noted that the final ministerial committee report on the Hambantota Port had been sent to the Attorney General with recommendations. The Ministry was able to negotiate to achieve the desired outcomes, he added. Ranatunga earlier took steps to register his protest against giving China Merchants Port Holdings Company (CMPort) 80% ownership, which would give them control over port functions including fee levying.
“We have worked very hard to get what we want. Going through the ministerial committee, things have changed a lot,” the Minister insisted, but fell short of revealing specifics changes made from the clauses outlined in the framework agreement. Earlier this week it was reported that Ranatunga raised objections regarding the share percentage and handing of security with Minister of Development Strategies and International Trade Malik Samarawickarama. He also insisted that there has been no move to change to the SLPA Act.
Ranatunga also blamed the loan burden from the Hambantota Port as dampening proposed developments at the Colombo Port, which according to him urgently needs an equipment upgrade.
“I think if we can get this Hambantota deal quickly, then we know our financial stability for the next two to three years,” he explained.
Despite having received six proposals for the East Terminal, the Public Private Partnership (PPP) selection process was put on hold to focus on Hambantota Port negotiations, the Minister explained. However, SLPA is focusing on purchasing the cranes for the terminal.
“We have submitted a proposal to the Cabinet to buy equipment for the East Terminal costing about $ 65 million. But this has been put on hold due to the negotiations. Once the negotiations are over we hope that proposal will be evaluated. At present the proposal is with the Cabinet Committee on Economic Management (CCEM),” he explained.
Worried that the Colombo Port will lose business if its capacity is not upgraded soon as CCIT terminal is expected to maximise capacity by July this year, Ranatunga hopes to have the terminal in working order when the partnership agreement with the selected party is finalised, which he estimates will take up to a year of negotiations.
“Once that is done, then we can start operating the terminal immediately. What we are planning to do is try and get the East Terminal as soon as possible,” he explained.
According to him, the productivity of the Jaya Terminal is also low due to a lack of technologically advanced equipment. However, he insisted that the port has been able to improve its processing rate despite the equipment being at least 20 years old.
“We need to at least upgrade some of the equipment soon. The plan is to upgrade at least four cranes in the coming year,” Sri Lanka Ports Authority Chairman Dammika Ranatunga told Daily FT.
