China Underground > China News > China, Sri Lanka sign $1.5 billion port deal

China, Sri Lanka sign $1.5 billion port deal

Sri Lanka’s port – Sri Lanka’s government on Saturday signed a long-delayed agreement to sell a 70 percent stake in a $1.5 billion port to China in a bid to recover from the heavy burden of repaying a Chinese loan obtained to build the facility.

COLOMBO, Sri Lanka – The document was signed between the government-run Sri Lanka Ports Authority and the state-run China Merchants Port Holding Co. in the capital, Colombo, in the presence of senior government officials from Sri Lanka and China.

According to the agreement, the Chinese company will invest $1.12 billion in the port, which sits close to busy east-west shipping lanes.

Two local companies whose shares will be split between the Chinese enterprise and the Sri Lanka Ports Authority will be set up to handle the port’s operations, security and services.

The Chinese company will be responsible for commercial operations while the Sri Lanka Ports Authority will handle security.

The port, built with a Chinese loan during the administration of former President Mahinda Rajapaksa, is seen as a white elephant because it has failed to become financially viable since it began operations in 2011.

 

If you like this article, please help us by making a donation so that we can continue our work. Please help keep us independent.

 

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.

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.

The port is part of Beijing’s so-called string-of-pearls plan for a line of ports stretching from its waters to the Persian Gulf.

During his administration, China provided loans for an airport, sea port, highways and power plants, and became the largest investor in Sri Lanka.

Sri Lankan officials have repeatedly reiterated that the port’s security will be handled by Colombo in an attempt to allay the fears that the port could be used by Chinese as a military hub.

The agreement has ignited protests inside the country too and in January, hundreds of farmers and opposition supporters protested the plan to lease the port, saying the proposed partnership was akin to a sellout of the country.

Source: Associated Press

 


Subscribe to China Underground and get the free magazine 'Planet China'

* indicates required

View previous campaigns.

By clicking Sign Up, you agree to our terms and conditions.

You can unsubscribe at any time by clicking the link in the footer of our emails.

We use Mailchimp as our marketing platform. By clicking below to subscribe, you acknowledge that your information will be transferred to Mailchimp for processing. Learn more about Mailchimp's privacy practices here.

Previous

Rafting in China’s most overcrowded river

Videos and propaganda images of the Chinese Doomsday cult ‘Church of Almighty God’

Next

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.