Sri Lanka’s coalition government is attempting to sell the state resources for a pittance by trying to cover up the true financial viability of such assets under state ownership by repeatedly portraying such assets have led the country into a debt trap, charged a coalition of trade unions consisting of professionals.
In a statement released to media, the Engineers Association of Sri Lanka Ports Authority (EASLPA) claimed the East Container Terminal (ECT) of the Colombo port, Hambantota port and the proposed industrial zone are money spinning assets owned by the SLPA but the government is trying to sell them.
The Sirisena-Wickremesinghe administration appears resolute in disposing some of the state-owned enterprises and assets to overcome a debt trap alleged to have created by the previous President Mahinda Rajapaksa’s administration.
However, public opinion is gaining traction against such sell offs and the government has postponed going ahead with such action for the time being.
According to the EASLPA, ECT is the only terminal owned and operated by the authority which has a depth of 18 meters and can handle mega-vessels carrying over 12,000 twenty-foot equivalent units (TEUs).
The government is said to have been working on to offer this terminal to an Indian company despite calling for bids from international port operators to develop the ECT.
However, the SLPA engineers claim the terminal could be easily turned into a profitable one with just about US$ 70 million investments on machinery.
Some of the private local banks have even offered to provide the funding but the government is said to have shied away for reason best known to them, the charge.
The engineers warned of losing all business for the SLPA within a matter of five years if the government offers ECT to a private party because such action will risk SLPA losing the shipping lines that currently uses its terminals.
“By offering the ECT to the private sector, the SLPA will lose future business from vessels. Therefore what is required is to turn the ECT into a terminal which handles bulk cargo for larger vessels under SLPA by procuring the required machinery and equipment,” the EASLPA said.
According to the statement, SLPA in 2016 has handled 5.7 million TEUs and has shown a 10 percent compound annual growth rate with a current capacity utilization of 80 percent of the port.
The total revenue of the port was Rs.36 billion of which Rs.17 billion was earned from bulk cargo handling. Another Rs.1.8 billion and Rs. 1.9 billion were earned from SLPA’s interests in South Asia Gateway Terminals and Colombo International Container Terminals, the two private sector terminal operators at the Colombo port.
Meanwhile, the engineers also accused the government’s attempting to hide the true financial potential of the port and the proposed industrial zone in Hambantota.
According to them, the port has earned a revenue of Rs.1.2 billion in 2014 which had gone up to Rs.2.0 billion in 2015 through just two berths.
Therefore, they claim the port could earn over Rs.11 billion in annual revenue if the second stage of the port development continued as planned with 11 berths to be built. Out of this, SLPA receives 60 percent as net profits while the balance 40 percent goes to Magam Pura Management Company (MPMC) as operational overheads.
They also pointed out that the total loans obtained to develop the port was US $ 1.2 billion— out of which, US $ 840 million was taken at a rate of 2.0 percent while the balance US $ 360 million was at a rate of between 6 -7 percent per annum.
The engineers said that the earlier plan was to service the Hambantota port loan through part of the rent income by re-leasing 120 hectares of SLPA owned land of the proposed Port City project as Port City management was under the SLPA earlier.
However, since the SLPA has been relieved of Port City administration now, the authority does not receive this income or the additional income from the second stage of the Hambatota port as the operations of the terminals have not yet commenced due to non-supply of required machinery and equipment.
Further, an artificial island which was built using the excavated earth during the second stage of development of the port could have also been leased out on a long term lease to settle a large portion of the debt of the project but this too has still not been explored.
The engineers union also revealed previous plans to establish the country’s largest industrial zone inside the port premises with an extent of 7 square kilometers, though which the government had planned to earn income from multiple sources.
Then the plan was to lease one hectare of land at the rate of Rs.7.5 million subject to 3.0 percent annual increase. “Therefore, a lease of a minimum of 600 hectares must earn more than Rs.4.5 billion per annum”, they said.
However the coalition regime plans to give out 15,000 hectares of land in and around Hambantota for the Chinese under 99 year renewable lease creating waves of public unrest.