H’tota port deal gets unanimous Cabinet approval

P’ment told China Merchant to get 80% stake but after five months 20% equity released to attract another investor via stock market

Cabinet has unanimously approved Government plans to enter into a public-private partnership agreement with a State-run Chinese company for the Hambantota Port that would include setting up an industrial zone at the same location. 

Special Assignment Minister Dr. Sarath Amunugama, joining the adjournment debate yesterday in Parliament, said: “According to the joint venture agreement, China Merchant would hold 80% stake and the remainder will be held by the Government. After five months, 20% equity will be made available, enabling any other investor to purchase through the stock market. 

In terms of economic development, receiving Cabinet approval is a historical milestone. The proposed industrial zone, which will be the largest of its kind in the South Asian region, will make room for at least 400 industries.”

Dr. Amunugama chaired the six-member Ministerial Committee appointed to finalise the agreements related to the Hambantota Port joint venture. Government Ministers had earlier expressed confidence that the deal would be signed by the end of this month. 

Previous media reports had also indicated the 20% equity divestment would be made after the lapse of several years and not immediately as detailed by Dr. Amunugama. Among other important provisions are an express prohibition of military activity in the area and the envisaged creation of an oversight committee to take care of national security.

The Government is hoping the sale, which will bring in about $ 1.12 billion, as listed out in the framework agreement that was entered into in January, will help bolster flagging reserves. The International Monetary Fund (IMF) in its latest review report flagged unmet reserve targets and called on the Central Bank to stand ready to raise rates. (AH)