Colombo: Sri Lanka’s new government led by President Gotabaya Rajapaksa wants to undo the previous regime’s move to lease the southern port of Hambantota to a Chinese venture, citing national interest.
Former Prime Minister Ranil Wickremesinghe in 2017 changed the terms, saying it would be difficult to pay the loans taken to build the project. He agreed to lease the port for 99 years to a venture led by China Merchants Port Holdings Co. in return for $1.1 billion. That helped ease the Chinese part of the debt burden raised to build the port.
The port is part of the controversy dogging Chinese President Xi Jinping’s Belt and Road initiative. China has been accused of luring poor countries into debt traps. An attempt to rework the transaction will help the new Sri Lankan government, led by Gotabaya and his brother Mahinda, showcase their drive to change contracts seen as hurting national security, a key campaign platform for Gotabaya, a former defence secretary.
China’s infrastructure-building in Sri Lanka became part of Beijing’s Belt and Road Initiative, prompting concern in India about its geopolitical rival using a port close to its southern coastline for future military or strategic uses. Gotabaya is in India on Friday for his first state visit overseas. China has dismissed worries over any military dimension to its investment in the Hambantota port, which lies on the main shipping routes between Asia and Europe, and said it was mutually beneficial that would aid Sri Lanka’s economy.
A similar port deal under the Belt and Road program in Myanmar was drastically changed to $1.3 billion from $7.5 billion, while in Malaysia the government cancelled $3 billion worth of pipelines and renegotiated a rail project in 2019, cutting that one’s cost by a third to $11 billion.
The China Merchants, whose $93 billion of revenue dwarfs Sri Lanka’s gross domestic product, has been able to use its experience stretching from China to Europe to help kick start the Hambantota port, which once hardly attracted any ships. China Merchants’ Hambantota joint venture also last month said it had entered into an agreement with Japanese shipping conglomerate Nippon Yusen KK, for vehicle transshipment through the port.