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Bank files case against SLPA over unpaid loans

28 Nov 2021

  • Over $ 22 m in unpaid loans accumulated by Magampura
  • Loans obtained in 2014 amounted to $ 24 m
  By Imesh Ranasinghe  A private commercial bank had filed two cases against the Sri Lanka Ports Authority (SLPA) in the Colombo District Court in 2020 over unpaid loans amounting to $ 22.3 million taken by Magampura Port Management Company (Pvt.) Ltd. (MPMC), which ceased operations in 2017, the Auditor General’s report revealed. Accordingly, the MPMC had obtained four loans worth $ 24 million from said private commercial bank in 2014 for the purchase of bunkering oil stocks, with the purpose of entering the bunkering business. However, the initiative was later called off under the Yahapalana Government, as the losses from the bunkering business amounted to about $ 19 million due to irregularities in the purchasing process. Then Ports and Shipping Minister Arjuna Ranatunga said that the company had purchased a shipload of diesel of 17,818 tonnes for bunkering purposes, which had been rejected by the Ceylon Petroleum Corporation (CPC) due to its substandard quality. Regardless of these findings, no proper investigation was launched into the matter. According to the Auditor General’s report, a sum of $ 22.3 million out of the total amount had not been repaid even by the end of 2020, as the MPMC had no sufficient assets to repay the loans.  “Meanwhile, the relevant bank had filed two cases in the Colombo District Court in 2020 against the subsidiary and the Authority to recover the loan. However, the SLPA, as the guarantor of the loan and as the parent company, had not made any provision for contingent liabilities for this purpose and the filing of a case had not been disclosed even in the financial statements,” the Auditor General’s report stated. When contacted by The Sunday Morning Business, SLPA Vice Chairman Dr. Prasantha Jayamanne refused to comment, stating that the matter was still in court, while Managing Director Upul Jayatissa said that he did not have details about the matter. However, despite the losses incurred by the MPMC, the company had made repayments in 2015 and 2016 before ceasing its operations in November 2017, according to the National Audit Office’s 2017 report on the MPMC. The annual report of the SLPA for 2016 stated that the repayment of the loan was not made due to discontinuation of bunkering oil stock operating activities, which had resulted in uncertainty in financing the loan installments. Operational activities of the Hambantota Harbour were carried out by the MPMC during the period of 2009-2016, while the operating loss of the port, up to 31 December 2017, amounted to Rs. 21,904 million, the SLPA annual report for 2017 stated. According to a policy decision taken by the former Yahapalana Government in 2017, assets owned by the Port were entrusted to two private companies; namely Hambantota International Port Group (Pvt.) Ltd. (HIPG) and Hambantota International Port Services (Pvt.) Ltd. (HIPS), with the public-private partnership between the SLPA and China Merchants Port Holdings (Pvt.) Ltd. for a 99-year period at $ 1,400 million.  Under the above transaction, $ 973,658 million had been paid by the China Merchants Port Holdings Ltd. to the SLPA in three installments as at 30 June 2018 for the purchase of its shares, and that money had been remitted to the Treasury.

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