By Rohan Abeywardena
The now much delayed country’s biggest foreign investment so far, the $500 million first terminal of the new Colombo South Harbour by a Chinese led consortium, is still held up and having failed one deadline it is now getting close to a second deadline, informed port sources said.
They warned that with these most unusual delays the targeted commissioning of at least two 300 metre berths in the terminal out of four totaling 1200 metres might not take place in 2013 as planned. The Colombo Port is already reaching saturation point with tremendous amount of containers being generated from the booming economy in India.
Sources said much of the blame for the delays lie with the Attorney General’s Department as happened with the much delayed signing of the Joint venture deal with Indians to build the country’s second coal fired power plant at Sampoor with AG’s Department officials splitting hairs over some minute points.
A top Sri Lanka Ports Authority official expressed the hope that they would get the final okay from the AG’s Department next week so that they could keep to the new deadline of signing the rest of the agreements before November 12. The Island reliably learns that SLPA Chairman Dr Priyath Bandu Wickrema himself had visited the AG’s Department on several occasions to expedite matters.
When the Build Own and Transfer (BOT) agreement for the project was signed in China during President Rajapaksa’s state visit there on August 12, it was agreed to sign the balance agreements within three months.
Earlier in terms of the Letter of Intent issued to the winning consortium, Colombo International Container Terminals Ltd., comprising China Merchant Holdings International and Aitken Spence PLC last September the final agreements should have been signed within six months.
Sources said things have not been helped by the financing bank, the China Development Bank, which is expected to provide a loan of $350 million also including various new safety clauses into the Direct Agreement, after allegedly having burnt its fingers in a venture in Myanmar.
The final agreements that yet remain to be signed are the shareholder agreement, site lease agreement and the direct agreement with the funding bank.
The BOI has already granted the venture a25 year tax holiday and duty free inputs under Strategic Development Project Status.
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