Sri Lanka today signed a $1.1 billion deal to lease the southern deep-sea port of Hambantota to China for control and development for a 99-year period and also lease a surrounding 15,000 acre of land for development as an industrial zone.
"Sri Lanka will be well positioned to play a strategic role in the one?belt-one-road initiative of the government of the People?s Republic of China", Hu said.
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.
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.
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. The government was considering to sell some of its stake and in a bid to increase its dominance over the sea ports in the continent, China came as the frontrunner to buy the stake on sale.
This photo, dated February 10, 2015, shows the Hambantota port, in southeast Sri Lanka. Cash from the firm's majority stake will be used to repay part of the island nation's huge foreign debt. Under the 99-year lease agreement, CMPort is to invest up to United States dollars 1.1 billion in the port and marine-related activities.
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.
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. In May, Sri Lanka turned down a Chinese request to dock a submarine.
"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 Hambantota port straddles the world's busiest east-west shipping route and several countries, including neighbouring India, had raised concerns China could use it for its own military needs.