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When the annual budget is around the corner, people from all walks of life keep their fingers crossed looking for succour in terms of salary hikes, welfare measures, subsidies, price reductions of essential food items etc.   


Finance Minister Ravi Karunanayake will present the 2017 budget to Parliament this afternoon. All indications suggest that he would present it with a broad outline of measures aimed at rejuvenating the long term development based upon its own economic policies.   


Rather than concentrating on social welfare measurers beyond a point, the government will lay down economic reforms, which it believes, will stimulate economic growth. It targets dispensing with the debt burden as soon as possible. Instead of repayment of certain foreign loans, the government has secured even the Cabinet approval ahead of the budget to swap debt for equity. As part of it, 80 percent of assets of the Hambantota Port will be sold to a Chinese company.   


Well ahead of the budget, the Cabinet Committee on Economic Management (CCEM), headed by Prime Minister Ranil Wickremesinghe, submitted its report to the Cabinet on the development of the 
Hambantota Port.   


The CCEM appointed a committee consisting of the following members to review and negotiate with the assistance of Senior Advisor to Minister of National Policy & Economic Affairs R. Paskaralingam, and submit recommendations on the debt to equity swap proposed by the Chinese corporates who are nominated by the government of China through their embassy in Colombo. They are Dr. R.H.S. Samaratunga, Secretary, Ministry of Finance, L.M. Jayampathi, Secretary, Ministry of Ports and Shipping, Nihal Somaweera, Secretary, Ministry of Transport and Civil Aviation, Chandanie. Wijayawardhana, Secretary, Ministry of Development Strategies & International Trade (MODSIT), Mr. Shirantha Herath, Chairman, Southern 
Development Authority.  


The report said, “The Chinese embassy, on behalf of the government of China has recommended two state-owned corporates as their nominees for the Hambantota Port Development Project, namely;  
1.China Communications Construction Company (the holding Company of China Harbour Engineering Company LTD. - CHEC), and  
2.China Merchants Port Holdings Company Limited (CMPort), formerly known as China Merchants Holdings International - (CMHI).  


The Special Committee met on September on 23, 2016 and decided to invite the contenders for presenting their respective proposals and clarify matters by September 30, 2016. Accordingly the two corporates were requested to come forward with their proposal for a discussion to be held with Secretaries Committee on 30 September at 2.30 p.m. which they accepted.  


The following officials were invited to take-part and requested to assist the Special Committee in their deliberations.  


1. M.I.M. Rafeek, Secretary, MNPEA  
2. Dr. B.M.S. Batagoda, Secretary, Ministry of Power & Renewable Energy  
3. Mangala P. B. Yapa, Managing Director (Designate), Agency for Development, MODSIT (on invitation)  
4. S.K. Premachandra, Managing Director, Sri Lanka Ports Authority (SLPA)  
5. Janaka Kurukulasooriya, Addl. Managing Director, SIPA  
6. S. Mudalige, Director General, Department of National Planning, MNPEA  
7. Priyantha Ratnayake, Director General, Department External Resources, MNPEA  
8. S. Prabbakar, Agency for Development/MODSIT  
9. Udaya Mallawarachchi, Director, Department of National Planning, MNPEA  
10. Madhara De Silva, Director, Department of External Resources  


There are loans taken from China to the value of US $ 1,328 million and the Sri Lanka Ports Authority (SLPA) too has taken two loans amounting to US $ 44,881,475 for bunkering facility from local banks. The importance and necessity of making a physical verification of assets and a valuation, was identified.  


3. It was decided that the land allocated to the project could be considered on a 99-year 
lease basis.  


The two nominees were requested to present their proposal and the outcome is 
summarized below.  


1.China Communication Constructions Company (CCCC)/China Harbour Engineering 
Co., Ltd . 


The following personnel representing CCCC (and China Harbour Engineering Co., Ltd.) were present at the meeting.  
1. Zhang Xiaoqiang  
2. Zhang Lianjiu  
3. Chen Tianliang  
4. Ruwani Nilanganie Munasinha  


They explained their intention to acquire a substantial part of assets of Hambantota Port and ancillaries, develop an Industrial Zone and the city and bring in further investment into port- related industries such as cement grinding, refinery, shipyard, warehousing, bonded operation etc. adopting their PlC (Port - Industry - City Ecosphere) Strategy, as described in their proposal. They emphasized the need to have a single party to operate the Port and the Special Economic Zone, and indicated their reluctance to consider the development of the Industrial Zone, if a different party is chosen for the Port operation.  


It was explained that the immediate interest of the government of Sri Lanka was to decide on the party, with whom the project can be pursued further, which would primarily depend on the equity that the party would take on the Port and the amount and timing of FDI that would 
be deployed.  


The CCCC representative stated that they intend taking 65 percent of the stake of other assets, valued at approximately US $ 1,136 million, excluding the Container Terminal and deploy a sum of US $ 740 million as their equity in two tranches; one in 2017 and the other in 2019. In addition, they would also continue with the SOT Agreement with an equity contribution of US $ 391 for Container Handling Equipment for Phase II (Container Terminal).  


President Sirisena finally gave his nod to the proposal, and it was communicated to the Cabinet on Tuesday. The project will be launched on January 8, next year in coincidence with the President’s second anniversary. On his first anniversary, he initiated the constitution making process. 


 

New Party fundamentally different to UNP and SLFP

The newly formed ‘ Sri Lanka Podu Jana Peramuna’ has undertaken its membership drive covering three districts initially this week- Ampara, Moneragala and Polonnaruwa. The party, chaired by former External Affairs Minister Prof. G.L. Peiris, intended to recruit one million members. Accordingly, the party reserved quotas for each district.   


However, the party says it has to exceed the limit now because there is a rush for membership. This is a party formed with the blessings of former President Mahinda Rajapaksa. It is expected to be led by him at one point. However, for the time being, Mr. Rajapaksa has not made any public commitment to that effect publicly.


 

GL wants MR to lead it

Prof. Peiris said it was his wish that Mr. Rajapaksa should lead the new party as the public demand was for him only.   


Along with the membership drive, the new party is currently working on its constitution and manifesto at the moment.   


The party is going to commit itself to protect the unitary character of the country in its 
constitution itself.   


“We are against the selling off of family’s silver to find money for the government’s day to day expenditure,” he said. 


The new party is a direct affront to the Sri Lanka Freedom Party (SLFP) currently chaired by President Maithripala Sirisena. Let alone, the new party is likely to have fundamental differences with the present outlook of the SLFP.  


The party believes what is done by the SLFP at the moment is a far cry from its founding principles.   
“The SLFP is just becoming an adjunct to the United National Party (UNP). There is a real gap. There is a clamouring need to fill this gap,” he said. The new party is opposed to what it calls ‘selling the family silver’ for the purpose of finding money for every day expenses.  


As for the foreign policy, the party is against the departure from the principles of non-alignment. It says it is appalling to see the manner in which the current government deals with China.  
“What we are losing today is our sense of identity. We do not want to align ourselves as a junior partner of a power bloc. We are appalled at the situation developing regarding relations with China,” he said.   


Next, the new party is to team up with other parties in the Joint Opposition for the formation of a fresh alliance to contest elections in the future under a 
common symbol. 


 

MS claims he got 12-15% slfp vote

In an obvious response to such criticism, President Sirisena, at a recent function in Maharagama, tried to assert that he received up 12 to 15 percent of votes from his SLFP at the election. In this manner, he rubbished the claim that the UNP was the sole factor that ensured his victory.

  
“According to a survey, I have received 12 to 15 percent of SLFP votes. I only left the government to contest as the common candidate. Not that, I left the party. I never quit,” he said.  


This is also an argument trotted out by him to consolidate his hold of the SLFP. Against the backdrop, it will not be easy to sustain the stability of the unity government as the members from the two sides pull in different directions.   


Be that as it may, there are also factors compelling them to be together withstanding all odds and strains in their way. If the two sides part ways, it will be politically disastrous, more or less, to them. 


 

China extends invitation to MR

The Chinese government has invited former President Mahinda Rajapaksa for a visit from November 23 to 29. He will be accompanied by Prof. Peiris. During his time, the Sino-Lanka relationship was elevated to the level of Strategic Partnership Cooperation. However, the relationships suffered after the new government assumed office with the suspension of the port city project.  


It took a turn for the worse when Ambassador Yi Xiangliang was critical of Finance Minister Ravi Karunanayake. Yet, efforts are underway to patch up relations at the moment.   


According to reports, Foreign Affairs Minister Mangala Samaraweera has been briefed about Mr. Rajapaksa’s visit by the Ambassador.   


“Actually, I asked the Ambassador to keep him there if possible,” Mr. Samaraweera told the Cabinet jovially on Tuesday. 


 

Differences between President and UNP become clear

The national unity government was formed initially for a two year period ending in December, 2017. In the process, the two parties- the UNP and the SLFP- announced that they would stick to each other right throughout the term of the present Parliament.   


However, even before the completion of the initial two years, differences between President Sirisena and the UNP surfaced. On one occasion, he spoke out against the Financial Crimes Investigation Division, the Bribery Commission and the Criminal Investigation Department (CID).   


It led to antagonism between the two sides, and eventually, the Ministers representing the UNP have started taking direct and indirect swipes at the President in public. In essence, the UNP Ministers try to drive home the point that their party played the pivotal role in bringing the President to power, and that he should respect it.

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