Sri Lanka, China sign $1.5 bil­lion port deal

The Korea Times - - WORLD BUSINESS -

COLOMBO (AP) — 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.

The agree­ment comes af­ter a nearly six-month de­lay since the sign­ing of the frame­work deal, which im­me­di­ately drew pub­lic crit­i­cism and protests.

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. Un­der the orig­i­nal frame­work agree­ment, an 80 per­cent stake would have been sold to China.

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 lease pe­riod is 99 years.

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.

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


Sri Lanka’s Min­is­ter of Ports & Ship­ping Mahinda Sa­ma­ras­inghe, left, ex­changes sou­venirs with Ex­ecu- tive Vice Pres­i­dent of China Mer­chants Port Hold­ings Dr. Hu Jian­hua dur­ing the Ham­ban­tota In­ter­na­tion- al Port con­ces­sion agree­ment at a sign­ing cer­e­mony in Colombo, Satur­day.

Newspapers in English

Newspapers from Korea, Republic

© PressReader. All rights reserved.