Sri Lanka, China sign Hambantota port deal worth ₹10000 crore

Jul 31, 2017, 00:27
Sri Lanka, China sign Hambantota port deal worth ₹10000 crore

Sri Lanka agreed to sell 70 percent of the stakes in the port to China Merchants Ports Holdings.

Sri Lanka on Saturday, July 29, signed a $1.1 billion deal with China to lease the southern Hambantota port to Beijing, after several months of delay caused by protests.

Sri Lanka's government says money from the deal will help repay foreign loans.

Secretary to the Ministry of Ports and Naval Affairs, L.P. Jayampathi and Chairman of Sri Lanka Ports Authority, Parakrama Dassanayake signed the agreement representing Sri Lanka while the Vice Chairman of China Merchant Port Holdings, Dr. Hu Jianhua signed the agreement representing the Chinese government.

The Cabinet approved the agreement Tuesday after a almost six-month delay since the framework deal was signed and immediately drew public criticism and protests.

Under the new deal, which Reuters has examined, the Sri Lankan government has sought to limit China's role to running commercial operations at the port while it has oversight of broader security.

The port, close to the world's busiest shipping lanes, has been mired in controversy ever since state-run CMHC, which built it for $1.5 billion, signed an agreement taking an 80 per cent stake. "How can they face it (the debate) when it was they who started it", Wickremesinghe said, referring to former president Mahinda Rajapaksa's joint Opposition.

The port has racked up losses of $300 million in the last six years, according to official figures. It is seen as part of Beijing's so-called "string-of-pearls plan" for a line of ports stretching from its waters to the Persian Gulf. Now, Sri Lanka is unable to repay those loans.

China's influence in Sri Lanka makes neighboring India anxious because it considers the Indian Ocean region to be its strategic backyard.

"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".

The 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.

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