USD 1.2 bn received for leasing out H’tota port to China ‘misused’
Posted on June 24th, 2022

By Shamindra Ferdinando Courtesy The Island

Political interference, mismanagement, corruption still galore

The Sirisena-Wickremesinghe government had not utilised USD 1.1 bn received for leasing Hambantota Port to China Merchants Port Holdings Company in 2017, to settle a loan obtained for the construction of the facility during Mahinda Rajapaksa’s administration, the Committee of Public Enterprises (COPE) was told yesterday.

Auditor General W. P. C. Wickramaratne participated in the COPE inquiry into the Sri Lanka Ports Authority (SLPA) audit reports of 2020 and 2021 and current developments.

The yahapalana government leased a 70% stake of the port for 99 years after declaring its intention to settle the loan. However, it transpired at the COPE proceedings chaired by Prof. Charitha Herath, on Wednesday (22) that the USD 1.2 billion received for the long lease had been utilised for other purposes.

The then Ports and Shipping Minister Mahinda Samarasinghe signed the agreement on Sri Lanka’s behalf after Arjuna Ranatunga gave up the ministry as he opposed the deal. The Island yesterday brought this development to the notice of Ranatunga, who promised to comment once he studied the matter.

The watchdog committee pointed out that though the Treasury had paid back the loan and interest in installments, proper accounts hadn’t been maintained. As a result of bank interest balance (Rs. 147,746 mn) and foreign reserve loss (Rs 31,545 mn) being removed from SLPA accounts sans approval from the Treasury or the Cabinet-of-Ministers, and state accounts, didn’t give any indication of the amount of foreign loans obtained for building Hambantota port.

During COPE proceedings, it was also revealed that the Magampura Port Management Services Company, which had brought fuel required for ships on a USD 24 mn loan secured from a local bank, kept the stock till it expired. Subsequently, the consignment was sold for USD 3.5 mn, thereby causing a loss of USD 20.5 mn. The COPE has advised the Ports and Shipping Ministry Secretary to initiate legal action against the board of directors as well as its advisors.

The COPE noted that the Sri Lanka Ports Authority had continued to make recruitments outside the procedures laid down by the Management Services Department and the Salaries Commission.

It transpired at the COPE meeting that overtime payments for 2021 alone amounted to Rs 5,850 mn. This included Rs.1,173 mn paid for workers assigned to sections categorised as overstaffed. As a result of recruitment of approximately 1,500 unskilled workers, the skilled workers had to be paid overtime. The COPE was told some workers earned monthly overtime for as many as 400 hours.

The COPE also questioned why only Rs 600 mn had been given to the Treasury from 2016 to 2021 though it earned revenue of Rs. 69,686 during this period.

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