While claiming that the agreement negotiated by his government with China to manage the Hambantota Port is the best deal yet, former president Mahinda Rajapaksa said today this government has failed to get the best deal for Sri Lanka.
Mr. Rajapaksa said he had no issue with China or any foreign investors but was concerned about what’s best for the country and getting the best deal for it.
In a statement explaining the plans of the Rajapaksa Government to develop the port and to repay the loan obtained, he said the government has chosen the least favourable bid.
“The previous agreement, that my government negotiated with the China Harbour Co and China Merchant Co to manage the Hambantota container terminal for 40 years, is the best deal yet. According to information, the government has chosen the least favourable bid despite the Ports Authority having recommended the other bidder,” he said.
He said the current bid has been accepted in a situation where the other company, the China Harbour Co., had put up a more favourable bid to lease the free port on a 65-35 equity sharing basis for 50 years with an upfront payment of 750 million USD.
Mr. Rajapaksa said the new government has made some unwise decisions by disregarding several profitable agreements made by his government.
“The management contract for the Hambantota container terminal entered into by my government with China Harbour Co and China Merchant Co was cancelled. Then, the Ports Authority had developed the Colombo East container terminal and upon its completion by 2016, this terminal would have produced a revenue of more than 100 million USD a year which the Ports Authority had earmarked to pay off the Hambantota loan until the latter generated sufficient income. The ‘yahapalana' government halted the Colombo East terminal development,” he said.
He said he was against the leasing of the entire harbour for 99 years and giving the rights of a landlord over the industrial zone to a foreign private company.
“The industrial zone and the harbour should be controlled by the Ports Authority while harbour operations may be given on management contracts to the private sector. The Colombo port is run by the Ports Authority and two private operators. The Ports Authority has full control over the Colombo harbour as well as equity in the two privately run terminals. I believe this should be the approach to the Hambantota port as well,” he said.
Mr. Rajapaksa reiterated that the Hambantota Port made an operating profit of Rs.900 million in 2014 and Rs.1.2 billion in 2015.
“These are investments that last centuries and a new harbour cannot be expected to produce large profits in the first few years. Our plan was to break even within ten years,” he said.
Commenting on the Southern Industrial Zone, he said the total land area of all the Board of Investment economic zones in the country do not amount to 2,000 hectares and as such a 15,000 acre-zone in Hambantota will be disproportionate to the country’s economy.
He said the government should fill the free port with investments first before opening more zones.
“This is not an issue that can be resolved by baton-charging or tear gassing protesters or having them assaulted by thugs and remanded. There are real issues relating to the financial benefits that will accrue to the country from this deal, and issues of control and sovereignty over the free port and possible environmental issues that need to be addressed,” Mr. Rajapaksa said.