Long and Panama port concession deal irregularities? Changhe subsidiary voice
The sale of port assets by Hong Kong's Cheung Kong Hutchison Holdings Limited (referred to as Changhe) has not been settled, and the Panamanian government has questioned its illegal operation of port concessions. Changwa's Panama Ports Company (PPC) responded.
Panama's Comptroller General Anel Flores announced plans to file a lawsuit against officials who approved the 2012 renewal of the governor's 25-year port concession with his PPC subsidiary.
Under contracts originally awarded through tender in 1997, PPC operates two major ports at either end of the Panama Canal, Balboa Port at the Pacific entrance and Cristobal Port at the Atlantic entrance, which were renewed in 2012 for a 25-year franchise.
Back in February, Panama's attorney general issued a binding opinion that PPC's port concession contract was unconstitutional, and Panama's Supreme Court will have the final say on the matter.
Lawyers and experts say the concession could be revoked if Panama's Comptroller general confirms irregularities in the renewal of the PPC port concession, or if Panama's Supreme Court declares the contract unconstitutional.
In response, the PPC issued an official statement listing 10 points in response to the Panamanian queries.
PPC stressed that it has so far invested more than 1.695 billion balboa in Panamanian ports, far exceeding not only the 50 million Balboa required by the original franchise contract, but also the 1 billion Balboa investment in the additional agreement, and these investments were confirmed by Panama in 2020. Therefore, any claim that PPC did not pay Panama about 1.2 billion Balboa is an absolute fallacy against the facts.
In addition, PPC noted that according to the Panama Audit Office's 2020 audit report, PPC is in substantial compliance with the terms of its franchise contract. At the same time, the Panama Ports Authority determined in 2021 that PPC had fully fulfilled its obligations under the concession contract. The renewal of the franchise granted to PPC is being effectively executed and is in full compliance with all statutory requirements.
During the franchise period, PPC has paid 668 million balboa to Panama, far exceeding the contributions of other port operators in the region. In addition, PPC has contributed more than 5.9 billion balboa to the local economy through various added value, indirect effects, contributions to Panama and investments. The company is in full compliance with the regulatory requirements of the Panama Port Authority and has never violated regulations.
PPC concluded: "We strongly believe that legal certainty and the rule of law give companies and investors confidence that Panama is a safe country to invest in." Our track record of more than 28 years demonstrates our contribution to the construction of world-class ports, which not only create more than 25,000 direct and indirect jobs, but also contribute hundreds of millions of Balboa dollars to the Panamanian economy. PPC calls for respectful and constructive consultation to preserve the franchise's interest in providing quality port services to Panama and the world."
On March 4 this year, Changhe announced an agreement in principle with a consortium comprising BlackRock, BlackRock's Global Infrastructure Partners (GIP) and Mediterranean Shipping's (MSC) terminal operator TiL. To sell Changwa's 199 berths and related assets owned and operated by 43 ports in 23 countries around the world, as well as Changwa's 90% interest in PPC.
In this regard, Hong Kong SAR Chief Executive Li Jiachao put forward three points of view: First, the community's concern about the incident deserves attention; Second, the SAR government requires foreign governments to provide a level playing field for Hong Kong enterprises and opposes the use of coercion and pressure. Third, any transaction must comply with the requirements of laws and regulations, and the Hong Kong Government will handle it in accordance with the laws and regulations.
In response to the deal, the State Administration for Market Regulation has also made it clear that it will review it in accordance with the law to protect fair market competition and safeguard social and public interests.
Panama's Comptroller General Anel Flores announced plans to file a lawsuit against officials who approved the 2012 renewal of the governor's 25-year port concession with his PPC subsidiary.
Under contracts originally awarded through tender in 1997, PPC operates two major ports at either end of the Panama Canal, Balboa Port at the Pacific entrance and Cristobal Port at the Atlantic entrance, which were renewed in 2012 for a 25-year franchise.
Back in February, Panama's attorney general issued a binding opinion that PPC's port concession contract was unconstitutional, and Panama's Supreme Court will have the final say on the matter.
Lawyers and experts say the concession could be revoked if Panama's Comptroller general confirms irregularities in the renewal of the PPC port concession, or if Panama's Supreme Court declares the contract unconstitutional.
In response, the PPC issued an official statement listing 10 points in response to the Panamanian queries.
PPC stressed that it has so far invested more than 1.695 billion balboa in Panamanian ports, far exceeding not only the 50 million Balboa required by the original franchise contract, but also the 1 billion Balboa investment in the additional agreement, and these investments were confirmed by Panama in 2020. Therefore, any claim that PPC did not pay Panama about 1.2 billion Balboa is an absolute fallacy against the facts.
In addition, PPC noted that according to the Panama Audit Office's 2020 audit report, PPC is in substantial compliance with the terms of its franchise contract. At the same time, the Panama Ports Authority determined in 2021 that PPC had fully fulfilled its obligations under the concession contract. The renewal of the franchise granted to PPC is being effectively executed and is in full compliance with all statutory requirements.
During the franchise period, PPC has paid 668 million balboa to Panama, far exceeding the contributions of other port operators in the region. In addition, PPC has contributed more than 5.9 billion balboa to the local economy through various added value, indirect effects, contributions to Panama and investments. The company is in full compliance with the regulatory requirements of the Panama Port Authority and has never violated regulations.
PPC concluded: "We strongly believe that legal certainty and the rule of law give companies and investors confidence that Panama is a safe country to invest in." Our track record of more than 28 years demonstrates our contribution to the construction of world-class ports, which not only create more than 25,000 direct and indirect jobs, but also contribute hundreds of millions of Balboa dollars to the Panamanian economy. PPC calls for respectful and constructive consultation to preserve the franchise's interest in providing quality port services to Panama and the world."
On March 4 this year, Changhe announced an agreement in principle with a consortium comprising BlackRock, BlackRock's Global Infrastructure Partners (GIP) and Mediterranean Shipping's (MSC) terminal operator TiL. To sell Changwa's 199 berths and related assets owned and operated by 43 ports in 23 countries around the world, as well as Changwa's 90% interest in PPC.
In this regard, Hong Kong SAR Chief Executive Li Jiachao put forward three points of view: First, the community's concern about the incident deserves attention; Second, the SAR government requires foreign governments to provide a level playing field for Hong Kong enterprises and opposes the use of coercion and pressure. Third, any transaction must comply with the requirements of laws and regulations, and the Hong Kong Government will handle it in accordance with the laws and regulations.
In response to the deal, the State Administration for Market Regulation has also made it clear that it will review it in accordance with the law to protect fair market competition and safeguard social and public interests.
