Editor, NewsinAsia, 22 June 2018, where the title reads ” Sri Lanka’s Hambantota Port aiming to attract $500 mn worth of investments
Colombo, June 22 (Daily FT) – As China Merchant Port Holdings Ltd. (CM Port) completes the final tranche of payment for the Hambantota Port joint venture, the public-private partnership is now aiming to attract as much as $ 500 million worth of investments to set up plants inside the port as well as general operation expansion.
Hambantota International Port Group (HIPG), the joint venture company formed by the Sri Lankan Government and CM Port, has already received 15 proposals to set up plants inside the port, Ports Minister Mahinda Samarasinghe told the media yesterday at a press conference held at his ministry.
“HIPG and HIPS (Hambantota Inter-national Port Services) expect to set up port-related industries within the Hambantota Port similar to the Colombo Port. HIPG has received investment proposals from local and international investors,” Samarasinghe said.
The joint venture is concentrating on setting up marine-related industries, Chief Operating Officer Tissa Wickramasinghe said. “Starting from ship-handling services and bunkering; although those services are being provided right now, we need to develop them. Right now our marketing team is travelling globally trying to bring this business in,” he said. The investment offers already under consideration have proposed setting up an array of manufacturing plants including for cement, housing material construction and bioenergy and power generation through Liquefied Natural Gas (LNG).
The proposals of interested parties both local and international are now being considered, the China Merchant Group’s Sri Lanka Chief Representative Ray Ren told reporters at a press conference. The total investment is expected to be over $ 100 million, he said.
Down the Track
CM Port also has plans to invest $ 300-$ 600 million in the Hambantota Port to carry out infrastructure development, the Minister said. The majority of the funds will be utilised for development scheduled in Phase III and IV, he said. This is in addition to the $ 146 million that is due to be deposited within a month from the final payment to be utilised for port- and marine-related activities.
With the establishment of the joint venture with CM Port, the port has been able to double the number of transhipment vehicles handled from 15,000 to 35,000 per quarter. “Although quarter-to-quarter the number of ships remains the same the number of transhipment vehicles handled has doubled. It is through the global network that CM Port has that we were able to increase the number,” Wickramasinghe explained.
The last payment tranche of the $ 974 million lease agreement deal was handed over to the Sri Lanka Ports Authority this week. The money – the highest ever Foreign Direct Investment (FDI) received by Sri Lanka to date – will help boost the weakening rupee value, the Minister said.
“With the money coming in, foreign reserves will strengthen, interest rates will come down, the Central Bank will be in a position to control the rupee from further depreciation. The country’s credit rating will also stabilise and we will be able to give a good impression to international investors as well,” the Minister said.
Dismissing speculation that the delay in the last payment was due to a dispute over the utilisation of the artificial island belonging to the port, the Minister said that the land would only be used for marine-related activities. “This is even included in the concession agreement,” he said, assuring that the island would not be used for any leisure-related activities. Further, he also said that the delay, which was “only 12 days”, was due to the clearing of title deeds of land belonging to the Hambantota Port.
“We had to clear the land and have clear titles. Further, we had to also ensure that the bunker tanks at the port were also cleaned out,” said SLPA and HIPS Chairman Dr. Parakrama Dissanayake.
In addition, Samarasinghe said that the joint venture partners had agreed to allow the Sri Lanka Navy to remain within the Hambantota Port premises for the entirety of the 99-year lease period. “They will also use the jetty that they are using now. In fact they are scouting for a location to construct a jetty that can accommodate large naval ships belonging to the Navy. Until they finalise that they will use the current jetty,” he said.