By Mahinda Rajapaksa –
The manner in which the government privatised the Hambantota port has shocked the nation. Parliament was not allowed to debate the Agreement to privatise one of Sri Lanka’s most important strategic assets. No one knows who did the valuation of this asset. No one appears to have seen any technical/financial evaluation report. The government has also not explained to the public on what criteria they selected the company that won the bid when there was clear evidence that the other bid was much more favourable. This headlong quest to sell state assets is a direct result of the economic crisis that the government has plunged this country into. After the yahapalakayas lied their way to the presidency in January 2015, they knew it would not be possible to win the parliamentary election that was soon due by the same means, so they increased the salaries of government servants, reduced the price of fuel, gas and certain foodstuffs in order to bamboozle the people in a different way.
Thereby, they increased government expenditure while simultaneously reducing revenue, creating the present financial crisis. According to the Auditor General’s reports, the Budget deficit which was 5.7% of the GDP in 2014, had almost doubled to 10.5% in 2015 in just one calendar year. The lack of money to meet day to day expenses including the salaries and pensions of state sector employees resulted in massive foreign currency borrowings. In just two and a half years, the yahapalana government has taken foreign currency loans amounting to over USD 13.7 billion. All this money has been spent on consumption. USD 13.7 billion is the equivalent of ten Norochcholai power plants or ten Hambantota Ports, or more than twenty Southern Highways. But the government has nothing to show for all this money that has been borrowed and spent.
Under IMF instructions, the value added tax and other taxes were increased in 2016 to raise money to repay these debts. After imposing taxes even on terminally ill patients, the government was still not able to raise enough money to repay the USD 13.7 billion they borrowed and they have now resorted to increasing non-tax revenue through the sale of state owned assets. The Budget proposals of the yahapalana government make it clear that they intend privatising all state owned assets ranging from non-strategic business establishments like the Colombo Hilton to strategic assets like the Norochcholai power plant. The sale of the Hambantota port was just the beginning. The Prime Minister has already announced that the Mattala airport would be next. Other assets like the Colombo -Katunayake Highway, Southern Highway, Water Board and Electricity Board are also due to be privatised.
In their desperation to justify the sale of government owned assets, the government has been deliberately running down the enterprises they want to sell, as for instance by stopping bunkering operations in the Hambantota port. The total amount that has to be paid for the Hambantota port is USD 1,266 million capital + USD 495 in interest – a total of USD 1,761 million by 2036. By the end of 2016, nearly USD 500 million of this total amount had already been repaid. There was never any problem about meeting the payments for the Hambantota port because it was paid out of the profits of the Ports Authority. With its privatisation however, the loan taken to build the Hambantota port will be transferred from the Ports Authority to the Treasury to be paid by the tax payer.
The government has been trying to justify the privatisation of the Hambantota port on the grounds that the land for the Shangri La hotel was sold outright by my government. The few acres on which a non-strategic asset like a hotel is built cannot be compared to a strategically important port with four terminals, 12 berths and a 5,000 acre industrial park. The Shangri La land moreover was given on the specific condition that it can be used only for a hotel in accordance with the government’s urban development plan. The government has also been saying that my government gave land to a Chinese company in the Port City. The Port City is new land that is being reclaimed from the sea. This land has commercial value but is not of strategic importance like a major harbour.
Once the new land mass was created, the company carrying out the construction was to have the use of a very small part of it subject to Sri Lankan law, in lieu of payment. The entire project would not have cost the Sri Lankan government anything. It should also be borne in mind that my government enacted the Land (Restrictions on Alienation) Act No: 38 of 2014 which restricts the ability of foreigners and foreign owned companies to buy land in Sri Lanka but the present government removed all such restrictions by Land (Restrictions on Alienation) (Amendment) Act No 3 of 2017. My government built or created new things. The present government is making a living by selling what my government built.
The government will not be using the 1.12 billion USD that comes from the lease of the port to pay the loan taken to build the port. Instead the money is to go to the treasury to meet the day to day expenditure of the government. The USD 1.12 billion raised from the privatisation of the Hambantota port is small change for this government and will soon vanish just like the USD 13.7 billion they raised earlier. As public indignation mounts at the manner in which the Hambantota port was privatised, yahapalana ministers are now going around saying that my government too had planned to sell the entire Hambantota port to the Chinese. This is a diabolical lie. Everyone knows that my government had an explicit anti-privatisation policy. Not only did my government refrain from privatising any State assets, we reacquired several important assets that had been privatised by previous governments.
If things continue in the present manner, Sri Lanka will not have any national assets left by the time this government ends. The people should band together and organise in the villages, towns and workplaces to oppose this government’s quest to sell Sri Lanka off to foreign buyers.
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