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Hutchison Port Close To Losing Ecuador Deal

by Mary Swire, Tax-News.com, Hong Kong

06 January 2009


Fears have been raised over the future of the HKD4bn (USD513m) deal between Hutchison Port Holdings and the Ecuadorian government after the South American country's President, Rafael Correa, accused the company of failing to meet its contractual obligations concerning the development of the Port of Manta.

The revelations came during an announcement by Correa, who warned Hutchison Port Holding officials that he would put an end to the arrangement should Hutchison continue to miss its investment deadlines.

The deal between Hutchison Port Holdings – currently the largest port operator in the world – and Ecuador's government was first struck in 2006, and gave the Hong Kong-based company a 30-year concession to operate and develop the port at Manta.

However, President Correa has made public his significant dissatisfaction with progress regarding the port's development, and revealed in a national radio broadcast that he has already "pulled out the yellow card".

"If they don't comply with the Manta Port concession, they'll simply have to leave the country," he threatened.

It is hoped that the port development will eventually create the closest natural deep-sea port to Asia from the Pacific coast of South America.

However, a statement from Hutchison, published by the South China Morning Post, refuted the President's accusations, explaining:

"We are in compliance with the concession agreement, and have been working closely with the local authorities to develop modern container-handling facilities at the Port of Manta."

The statement also suggested that there had been no communication between the President and the company on the issue.


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