BOI confident of resolution

Monday, 14 May 2018 00:53 - - {{hitsCtrl.values.hits}}

Admits delay but says discussions ongoing, commercial agreement needed

Discussions on resolving the pipeline issue are ongoing, Development Strategies and International Trade Ministry Technical Advisor and Board of Investment (BOI) member Mangala Yapa, expressing confidence that a compromise could be reached by all parties soon.

He told the Daily FT that the issue had cropped up because the terminal had become part of an “evolving situation” regarding the Hambantota port and zone handover.

“This is really a commercial matter. This LPG project came before the restructure so there is a land lease agreement with the Port Authority for the LPG terminal and there has been a business venture agreement that has been signed. The business venture agreement refers to a common pipeline that is going into the port. Now there are discussions on technical and other matters and commercial terms and there is a little delay in that. The Ministry and the BOI are trying to facilitate these discussions, expedite matters and move forward,” he said.

“The parties have to agree to certain terms on how they are going to use this common pipeline because previously there had been no agreement on that, so it was not an area that was dealt with; that is where the issue is,” he added.

Yapa acknowledged that the issue had become time consuming because of the formation of a new company after the port handover and the terminal being a unique venture in Hambantota.

“Both sides have to do some commercial and technical studies, negotiate legal aspects and come to some understanding. We are very confident that it will be resolved soon. Naturally there is some anxiety and agitation on both sides in this matter but in a changing environment these are some of the loose ends that have to be tied up.”

He also pointed out that this was the only outstanding issue after the port handover as the concessionary agreement and the port workers’ problems had been ironed out.

“From a professional perspective, one is a port operator and the other is a terminal operator. This common pipeline is being done by Laugfs in someone else’s territory. That is why it is complicated. With our intervention they have been allowed to lay the pipeline to a great extent, but now they need to close it up with a commercial agreement. When things are delayed there is a grievance but I’m very confident this issue can be resolved.”