China back to work as Sri Lanka un­blocks $1.4 bil­lion port city

The Pak Banker - - MARKETS/SPORTS -

A Chi­nese con­sor­tium plans to restart work on a $1.4 bil­lion port city pro­ject in Colombo af­ter Sri Lanka un­blocked the pro­ject, a sign of thaw­ing ties weeks be­fore Prime Min­is­ter Ranil Wick­remesinghe trav­els to Bei­jing. Pres­i­dent Maithri­pala Sirisena had sus­pended the pro­ject a year ago, shortly af­ter he took of­fice fol­low­ing a cam­paign in which he ques­tioned China's role in Sri Lanka. CHEC Port City Colombo (Pvt) Ltd. on Tues­day wel­comed the "pos­i­tive step" and "mu­tu­ally ben­e­fi­cial so­lu­tion."

CHEC Port City "re­grets that the sus­pen­sion and the lengthy process taken to re­sume work have re­sulted in sig­nif­i­cant losses" to the com­pany and Sri Lanka, it said in a state­ment. The com­pany will look to com­plete the pro­ject "in the ex­pected time­frame," it said.

Sirisena, who shifted Sri Lanka closer to In­dia, is now look­ing to re­build re­la­tions with China as a bal­loon­ing fis­cal deficit and de­pleted re­serves force the govern­ment to seek ex­ter­nal help. Sri Lanka is look­ing for a loan of as much as $1.5 bil­lion from the In­ter­na­tional Mon­e­tary Fund, cen­tral bank Gov­er­nor Ar­juna Ma­hen­dran said on Tues­day.

In Septem­ber 2014, Chi­nese Pres­i­dent Xi Jin­ping in­au­gu­rated con­struc­tion of the Colombo Port City, which was be­ing built by a unit of state-con­trolled China Com­mu­ni­ca­tions Con­struc­tion Co. on an area slightly larger than Monaco. Sirisena had called for a re­view of Chi­nese in­vest- ments in an elec­tion that ousted pre­de­ces­sor Mahinda Ra­japaksa, who had strength­ened ties with Bei­jing's lead­ers dur­ing his 10 years in of­fice.

CHEC Port City said that Sri Lanka's govern­ment had con­ducted a sup­ple­men­tary en­vi­ron­men­tal im­pact study dur­ing the past year. The com­pany said it's a "re­spon­si­ble cor­po­rate ci­ti­zen" that "looks for­ward to con­trib­ute pos­i­tively to­ward Sri Lanka's econ­omy."

Malik Sa­ma­rawick­rama, Sri Lanka's in­ter­na­tional trade min­is­ter, said last week that the pro­ject can restart very soon, with few amend­ments to be fi­nal­ized this month. Th­ese in­clude con­vert­ing the land to a 99year lease in­stead of free­hold, and en­sur­ing that the Sri Lankan govern­ment has a stake in the ven­ture man­ag­ing the pro­ject.

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