Right of Reply HIPG denies Laugfs Terminal allegations

Hambantota International Port Group (HIPG) has sent the following clarification over the the Daily FT article titled ‘Laugfs unhappy over H’tota terminal delay’ published on 14 May. Hambantota International Port Group (HIPG) would like to categorically state that the company in no way intends standing in the way of local entrepreneurship as alleged in the article. The delay in giving approval is purely due to the lethargy of Laugfs Terminals, in not presenting the right documentation and the legal ramifications surrounding the issue.

HIPG is surprised that this matter has been sensationalised in the media when negotiations are ongoing and the ground is being laid to enter into supplementary agreements which would cover all approvals and rights not documented in the agreement Laugfs Terminals previously had with the SLPA. The new agreement between Laugfs Terminals and HIPG will incorporate new legal and commercial terms between the two parties.

In the interim HIPG has agreed to permit Laugfs Terminals to complete the piling work expediently, to be followed by the rest of the pipeline construction after the new agreement is signed. We wish to point out that our actions have been very tolerant taking into consideration that the said company initially began construction work within the Hambantota Port without the permission of HIPG. Nevertheless, in the spirit of goodwill HIPG has permitted them to continue, provided they iron out all the legal formalities. 

However, it would be pertinent to note at this juncture, that Laugfs Terminals has been dragging their feet, and have not submitted the relevant documentation for processing. 

This type of action can only go towards setting a precedent, which will certainly not create the required level playing field to attract prospective investors into the zone.

As pointed out in an earlier press release by the SLPA on this matter, “In line with the policy decision taken by the Government, the Sri Lanka Ports Authority, the Government of the Democratic Socialist Republic of Sri Lanka, China Merchant Port Holdings Company Ltd., Hambantota International Port Group Ltd. (HIPG) and Hambantota International Port Services Company Ltd. (HIPS) signed a concession agreement on 29.07.2017 to launch a Public Private Partnership to develop and operate the Port of Hambantota. In terms of the provisions of the aforesaid Concession Agreement, Sri Lanka Ports Authority and the Government of Sri Lanka had the obligation to assign/novate the Business Venture Agreements and the Lease Agreements executed within the limits of Port of Hambantota to the HIPG.” 

According to the Sri Lanka Ports Authority Laugfs Terminals Ltd. has the right to implement the project and to carry out its construction activities in line with the provisions of the respective Business Venture Agreement and the Site Lease Agreement. 

However, as pointed out by the SLPA the Laugfs Terminal Ltd. has carried out certain construction activities in an area outside the land leased to Laugfs Terminal Ltd.

HIPG fervently hopes this matter will be settled in due course to the satisfaction of all parties concerned, within the legal framework of the agreement.The Hambantota Port is managed by Hambantota International Port Group (HIPG) and Hambantota International Port Services (HIPS), two new companies set up by China Merchant Port Holdings (CMPort) and the Sri Lanka Ports Authority (SLPA).

China Merchants Port Holdings Company Ltd. (CMPort) owns 85% and Sri Lanka Ports Authority (SLPA) owns 15% of the stake in Hambantota International Port Group Ltd. (HIPG), which will undertake the project identified to restructure the Hambantota Port development and transform it to become a commercially-viable national asset.