United States, India and Japan raised concerns on Hambantota deal

The United States, India and Japan had raised concerns on the Hambantota deal with China, the Reuters news agency reported.

Sri Lanka formally handed over commercial activities in its main southern port to a Chinese company on Saturday and received US$292 million out of a US$1.12 billion deal, Finance Minister Mangala Samaraweera said.

The deal, signed in July, will see China Merchants Port Holdings, handling the Chinese-built Hambantota port on a 99-year lease. The port is near the main shipping route from Asia to Europe and likely to play a major role in China’s Belt and Road Initiative.

The US$1.5 billion port opened in 2010, but was incurring losses due to lack of commercial activity.

Ports Minister Mahinda Samarasinghe has said the Government will receive another 10 per cent, or around US$100 million, in a month and another US$585 million in six months.

An initial plan to give the Chinese firm an 80 per cent stake triggered protests by trade unions and opposition groups, forcing ministers to make some revisions that limit China’s role to running commercial operations while the Government retains oversight of broader security issues.

Both sides then agreed to redraw the deal and the Chinese firm will now hold a 70 per cent stake in a joint venture with the state-run Sri Lanka Ports Authority, part of a plan to convert US$6 billion of loans that Sri Lanka owes China into equity.

Sri Lanka has said the Chinese firm will invest an additional US$600 million to make Hambantota port operational and US$1.12 billion from the deal will be used for debt repayment.

Government and diplomatic sources told Reuters that the United States, India and Japan had also raised concerns that China might use the port as a naval base.

India is in advanced talks with Sri Lanka to operate an airport near Hambantota port. (Colombo Gazette)


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