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Thursday, 16 November 2017 01:30 - - {{hitsCtrl.values.hits}}
Seeking to fast-track payment from the $ 1.12 billion handover of the Hambantota Port, Cabinet has approved amending the Concession Agreement (CA) to revise the payment schedule between the Government and the Chinese investor and bring it forward, co-Cabinet spokesman Minister Dayasiri Jayasekara said yesterday.
The Cabinet paper was presented by Ports Minister and approved by the Cabinet on Tuesday afternoon.
The CA for the Hambantota Port, through a Public-Private Partnership between the Sri Lanka Ports Authority (SLPA), Sri Lankan Government, China Merchants Ports Holdings Company Ltd. (CM Port), Hambantota International Port Group Ltd. (HIPG) and Hambantota International Port Services Ltd. (HIPS) executed on 29 July 2017, was amended.
Following a request by the Ministry of Ports and Shipping to CM Port, the latter has agreed to advance the date and enhance the amount payable of ‘Investment Value 1’ on the effective date, the Cabinet paper said.
“Accordingly, 30% of the remaining balance of the Investment Value 1 (tranche 1), after deducting the security deposit ($ 5 million), shall be paid to the SLPA by CM Port on the effective date while 10% of the Investment Value 1 (Tranche 2) shall be paid to the SLPA by CM Port within one month from the effective date. The balance 60% of the Investment Value 1 (tranche 3) is to be paid to the SLPA within six months from the effective date,” the Cabinet paper said.
The initial CA stipulated that the ‘condition precedents’ would have to be fulfilled within 180 days from the date of signing, with the conditions being that a sum of $ 5 million has been paid by CM Port in favour of the Government to be held in a joint escrow maintained by the CM Port and SLPA Secretary and following the signing of the framework agreement, transferred to the SLPA as the first portion of ‘tranche 1’ on the effective date, the paper went on to say.
The second payment of 10% of the remaining balance of the investment value, deducting the security deposit (tranche 1), was to be paid to the SLPA within one month after the execution of the project documents while the third payment of the remaining 30% of the investment value (tranche 2) was to be paid within three months of the effective date. The final payment of the outstanding 60% of the investment value (tranche 3) was to be paid within six months of the effective date.
Central Bank Governor Dr. Indrajit Coomaraswamy earlier this month said the Government was building a buffer to tackle high debt repayments in 2018 and would go to the market in the first quarter of next year to raise funds. The Central Bank also expects as much as $ 400 million from the Hambantota Port handover to be remitted to Sri Lanka before the end of 2017. Dr. Coomaraswamy also said the Government is committed to use funds from divested assets for debt repayment and would open two accounts, one for foreign exchange and one for local currency, to facilitate the debt management process.
