The Government will sign an additional agreement to amend the payment clauses of the Hambantota Framework Agreement with China Merchant Port Holding Company Ltd (CMPort).
Co-cabinet spokesperson, Minister Dayasiri Jayasekara addressing the weekly cabinet media briefing yesterday said the government reopened negotiations with the company to fast track payments and they have agreed to the government’s request. The Framework Agreement signed on July 29, 2017 has the Chinese company purchasing a 70 percent stake in the Port at a cost of USD 1.1 billion on a 99 year lease. The Concession Agreement for the Port on a public-private partnership was between the Sri Lanka Ports Authority (SLPA), Government of Sri Lanka, CMPort, Hambantota International Port Group and Hambantota International Port Services Company.
According to the agreement, all condition precedents have to be fulfilled by parties within 180 days from the date of signing but the takeover was delayed due to the decision taken by the government to renegotiate the payment tranches.
CM Port through its affiliate has already paid the security deposit pursuant to the signing of the Framework Agreement, a sum of USD 5 million, and is being held in an escrow account jointly maintained by CMPort and the Ports and Shipping Ministry Secretary.
Earlier it was agreed that pursuant to the signing of the Agreement, the security deposit shall be transferred to the Ports Authority as the first portion of the Tranche on the effective date of the agreement. In addition it was agreed to pay 10 percent of the investment value (Tranche 1) within one month after the signing of the agreement, 30 percent after three months of signing (Tranche 2) and the remaining 60 percent within six months of signing (Tranche 3).
This agreement has now been amended to have 30 percent being paid on the date of signing, 10 percent after a month since signing and to pay the remaining 60 percent within six months of signing.
Accordingly the joint venture company between CMPort and the Government will take over the activities of the Port on December 8. Flashback: Officials exchanging the agreement in July.