Sri Lanka signs port deal for China's one-belt one-road plan

According to the deal, the Chinese side will hold a 70 percent stake in two joint ventures to be launched to take charge of the commercial and administrative management operations of the port respectively, Xinhua reported.

Ports Minister Mahinda Samarasinghe earlier said that Sri Lanka's navy will be responsible for security of the port which will not be allowed as a base for any foreign navy.

The agreement was signed between the government-run Sri Lanka Ports Authority and the state-run China Merchants Port Holding Co.in the capital Colombo on Saturday.

Before they were elected in 2015, opposition parties had criticized the project, but the government later sought help from China to make the port viable because of its severe underperformance and the heavy burden of loan repayment. According to the agreement, the Chinese company will invest $1.12 billion in the port, which sits close to busy east-west shipping lanes.

Opponents had raised concerns about a loss of land and were anxious that the port might be used by the Chinese military.

Hambantota port, overlooking the Indian Ocean, is expected to play a key role in China's "One Belt, One Road" initiative, otherwise known as the new Silk Road, which will link ports and roads between China and Europe.

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It borrowed billions of dollars from China to build roads, ports and airports to revive the economy after the end of the civil war in 2009.

Meanwhile former Ports Minister Arjuna Ranatunga who has been opposed to the deal, wanting a 60pc stake for the SLPA and not 80pc or 70pc, did not attend the ceremony. Under the original framework agreement, an 80 percent stake would have been sold to China.

In 2014, India was alarmed when a Chinese submarine docked in Colombo, where another Chinese firm is building a $1.4 billion port city on reclaimed land.

Sri Lankans also demonstrated in the streets at the time against plans to lease extra land near the port, fearing loss of their land, while politicians said such large scale transfer of land to the Chinese impinged on the country's sovereignty.

Sri Lanka Ports Authority will have ownership of the remaining share.

  • Adam Floyd