Rajapaksa Govt. selling Sri Lanka to China on the sly, claims UNP

The main Opposition, United National Party (UNP) yesterday alleged that the President Mahinda Rajapaksa Government was selling out to China on the sly.

UNP MP and its Chief Economic Spokesman Dr. Harsha de Silva in a statement said that yesterday’s official announcement by Aitken Spence that China Merchant Holdings was buying its 30 per cent stake as it was pulling out of the consortium to build and operate the Colombo South container terminal for 35 years was further evidence that the Rajapaksa Government was making way for the Chinese to firmly take control of the Sri Lankan economy.

“This goes to show the absolute failure of the regime to attract genuine investors for the post-war development phase of Sri Lanka in the background of the Expropriation Act and other confidence-eroding policy prescriptions,” Dr. de Silva pointed out.





He said that the direct reasons were speculated as China Harbour Engineering Company that has been awarded the contract to construct the terminal had escalated the costs by some 35% to US$ 350 million while at the same time China Development Bank, which had originally agreed to fund the debt component of the project, had demanded greater security for the loan, causing Aitken Spence no option but to pull out.

“It must be noted that all this has happened while the Ports Authority has allegedly begun to construct the so-called East terminal in complete contravention to the agreements originally signed that gave certain revenue guarantees to the South terminal concessionaries,” UNP MP said in the statement.

According to him, the cost increase by China Harbour is more than 100% of the original estimate of US$ 154 million as envisaged in the ADB agreement of February 2007.

“There seems to be a history of high costs and projects being awarded without tender to this company in the recent past,” Dr. De Silva said.

He said that according to reports, China Harbour’s bid to construct the breakwater of the Colombo South Port was some 70% more than the lowest bid and given the transparent bidding conditions of the ADB, it was unable to secure the contract.

However, the construction of the first phase of Hambantota Port went to China Harbour for US$ 360 million without tender plus the subsequent US$ 140 odd million for additional work including the blasting of the phantom rock in the seabed.

China Harbour has, according to its own website but not revealed by the Government thus far, already secured the second phase of the Hambantota Port for US$ 810 million. It is unknown if any tenders were called for this second project.

In addition China Harbour has been awarded the construction of the Mattala Airport at a cost of US$ 200 million. If this were not enough, the Ports Authority recently stated that China Harbour had also been awarded the contract to reclaim the sea adjoining the Colombo South Port at a cost of US$ 750 million. Again, no one knows if any tenders were called.

“What all this suggests is that the present Government is not interested in genuine foreign direct investments, but instead is more than keen to go with commission-based Chinese-funded projects to be undertaken at high costs by Chinese contractors such as China Harbour Engineering. Last week’s much hyped US$ 105 million project to build an ego-boosting tower of some sorts is also a Chinese project and so are almost all projects that are being awarded on an almost daily basis, be it roads, bridges, buildings, civilian aircraft or refurbishing military aircraft,” Dr. De Silva said.

“The repercussions of this short-term strategy to open all stops for the Chinese without any concerns for the geopolitics or the regional economic integration will be seen in the not-so-distant future,” the UNP MP warned.