China leases Sri Lanka port for nearly 100 years
- Author: Rogelio Becker Jul 31, 2017,
Jul 31, 2017, 0:29
July 30:After 10 years of negotiations, China Merchants Port Holdings has signed a 1.12 billion dollar agreement with the Sri Lanka Ports Authority to develop the Hambantota Port in southern Sri Lanka.
The Chinese firm will hold a 70 stake in a joint venture with SLPA to run the port. "We thank China for arranging this investor to save us from the debt trap", Port Minister Mahinda Samarasinghe told the gathering in Colombo port where the deal was signed.
The port's annual loan repayment commitment stands at $59 million, and by the end of 2016 the port had suffered a loss of $304 million, according to the government.
Sri Lanka's Minister of Ports and Shipping Mahinda Samarasinghe and China's envoy to Colombo Yi Xianliang were present when the Concession Agreement was signed.
The Hambantota port deal was scheduled to be debated yesterday, but the parliament was adjourned to Aug 4 after the opposition disrupted proceedings over a trade union action.
Executive vice president Hu Jianhua said the company wanted to make Hambantota the gateway to expanding economies in South Asia and Africa where it has similar port operations.
"(The) business of Hambantota port will be cross border, across the Indian ocean, stretching to the Far East, to Europe and to the globe", Hu said.
The port, overlooking the Indian Ocean, is expected to play a key role in China's Belt and Road initiative, which will link ports and roads between China and Europe. It is leasing out land to China to repay its loans.
"We have addressed geo-political concerns", the minister said at a signing ceremony in Colombo.
The Sri Lankan cabinet had on Tuesday approved the agreement, describing it as "a win-win situation for both countries".
According to the new deal, only Sri Lankan Navy will be responsible for security of the deep-sea port, and the port will not be allowed to become a base for any foreign navy.
"The government has the ability to amend the agreement in future as a result of a clause added to the agreement by President Maithripala Sirisena". He initially suspended all big Chinese-funded projects, but these have resumed after changes to the contracts made with the previous government.