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Last-minute amendments to H’tota Concession Agreement

Last-minute amendments to H’tota Concession Agreement

With just days to go before the handover of the Hambantota Port to its Chinese investor, Cabinet yesterday approved more amendments to the Concession Agreement with regards to changes in the ownership share structure that would be established after the takeover by the Chinese entity.

The new amendments to the Concession Agreement for the Hambantota Port by a Public-Private Partnership between the Sri Lanka Ports Authority, Government of Sri Lanka, China Merchants Ports Holdings Company Ltd. (CMPort), Hambantota International Port Group (HIPG) and Hambantota International Port Services Company (HIPS) would see 85% of the initial equity share capital of the HIPG being held by CMPort and its affiliates while 15% of the equity share capital will be held by the SLPA. Further, 58% of the initial equity share capital of the HIPS will be held by HIPG while 42% of the equity share capital will remain with the SLPA.

The initial Concession Agreement was signed between these parties on 25 July 2017 where it was agreed upon that CMPort would invest up to $ 1,120 million in the Hambantota Port as well as other marine-related activities in connection with the port. Of this amount, the total to be paid to the SLPA for the acquisition of 85% share capital of the HIPG would be $ 973.6 million, from which HIPG will use a sum to acquire 58% of the issued share capital of HIPS.

The Concession Agreement was amended in November as well by the Government, in a move to fast-track payments from the $ 1.2 billion handover of the Hambantota Port. The Cabinet approved the amendment to revise the payment schedule between the Chinese investor and the Sri Lankan Government to facilitate the payment of 30% of the total payable amount on the date of signing, 10% a month from the date of signing, with a remaining 60% to be paid within six months of the signing of the agreement.

Parliament has allocated time this Friday (8) to hold a debate on the Concession Agreement. A vote on the agreement will also be taken by the House.

CMPort is scheduled to take over operations of the Hambantota Port this Saturday (9).

(FT)

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