After many months of fraught discussions and stiff opposition from political parties and citizens alike, Sri Lanka on Saturday (29) forged ahead with the signing of a billion-dollar deal with a Chinese State firm to take over the Hambantota Port.
China Merchants Port Holdings Co., the state-owned Chinese port operator, has agreed to pay $1.12 billion for a 70% stake of Hambantota port leased for 99 years. The Chinese firm in a joint venture with SLPA to run the port, part of a plan to convert loans worth $6 billion that Sri Lanka owes China into equity.
Sri Lanka’s Minister of Ports and Shipping Mahinda Samarasinghe who was present at the signing ceremony cited that this agreement was a favorable agreement compared to the one drafted in 2014. He added that the agreement was still open to future and further amendments.
He further said the Chinese firm will invest additional $600 million to make Hambantota port operational while $1.12 billion from the deal will be used for debt repayment
Hu Jianhua, the executive vice president of the China Merchants Port said the port facilities belong to the citizens of Sri Lanka but will be a key part of China’s One Belt One Road initiative to build trade and transport links across Asia and beyond.
” Sri Lanka will be well positioned to play a strategic role in the one-belt-one-road initiative of China,” Hu said.
Located near the main shipping route from Asia to Europe and likely to play a key role in China’s “Belt and Road” initiative, the Hambantota port has been mired in controversy since the Chinese firm signed an agreement to take an 80 percent stake in the port built for $1.5 billion.
Sri Lankan government has revised the deal to set up two companies to split the operations of the port and allay concerns, in India mainly but also in Japan and the United States, that it won’t be used for military purposes.