Transfer of the Hambantota Port on a Debt to Equity Swap With China Merchants Port Holding Company Limited

The Srilanka  Government is  scheduled  to sign an agreement with the China Merchants Port Holding Company Limited on 8^th January 2017 next year to transfer the Hambantota Port on a debt to equity swap. Significant of  8^th January  is the date on which President Maithripala Sirisena was selected to the Presidency and assumed office.

The debt to equity swap will be carried out as part of the Government’s move to reduce its foreign debt burden. Under the proposed plan, the government was hoping to raise some US$1 billion as equity from the Port and the Mattala Airport. The previous government burrowed US$1,328 million from China for the port project.

 The company has expressed interest in acquiring 80 per cent of assets of the port by paying US$1.08 billion as their portion of the equity payable in instalments The first instalment amounting to 10 per cent will be paid within a month after signing the agreement, the second installment amounting to 30 per cent within three months and the rest within six months. Prime Minister Ranil Wickremesinghe  briefed the Cabinet on the proposed plan worked out by the Cabinet sub-committee on Economic Management.

President Maitripala Sirisena has also endorsed the proposal.