Hambantota port proceeds to be used to pay-off higher interest loans: Ravi

Jan 05, 2017 (LBO) – Sri Lanka’s government is planning to use Hambantota port proceeds to pay off higher interest loans which have already been taken, Finance Minister Ravi Karunanayake said.

Karunanayake told reporters Thursday that the expected value of 1.1 billion US dollars will be initially used to pay off the loans taken at higher interest.

“When the money comes in, we will look at what are the higher rates of interest that we are borrowing and we first pay those off,” Karunanayake said.

“But there are definitely 2 percent loans also, why should we pay those?”

He said the proceeds will be utilized prudently and judiciously while also looking at the opportunity cost.

Reproduced below is the debt service period of the Hambantota port.

ham-debt

Karunanayake said although the discussions are currently ongoing Sri Lanka will have a 20 percent share of the proposed joint venture agreement.

“CICT and SAGT was given on 15 percent; but our government is able to make 20 percent,” he said.

“We are still negotiating; but we are giving less than what Rajapaksa has given out.”

Development Strategies and International Trade Minister Malik Samarawickrama said a total of 1,200 acres will be used under 99 year lease for this whole port project.

“This land is required for port services as well as for a refinery, dockyard, LNG terminal and cement plant,” Samarawickrama said.

“These projects are already been discussed and on the verge of being finalized.”

He said that the discussions pertaining to the Hambantota port deal will be finalized within the coming two weeks.

“There was no delay; it will get finalized in 14 days; in fact, we have to sign three agreements,” he said.

First agreement will be the joint venture agreement with the China Merchant company to form a local company and a shareholder agreement.

“Then we have to look at the lease agreement between the SLPA and that local company we registered and then the third one is the concession agreement with the registered company and the government of Sri Lanka.”