COLOMBO
(Reuters) - Sri Lanka signed a long delayed $1.1 billion deal on Saturday to
lease its southern Hambantota port to China ignoring an appeal by opposition
parties
to debate the pact in parliament.
The deal was
signed between the two state firms -- Sri LankaPorts Authority (SLPA) and China
Merchants Port Holdings(0144.HK) to handle the commercial operations of the
Chinese-built port on a 99-year lease.
Chinese firm
will hold 70 stake in a joint venture with SLPA to run the port, part of a plan
to convert loans worth $6 billion that Sri Lanka owes China into equity.
"We
thank China for arranging this investor to save us from the debt trap,"
Port Minister Mahinda Samaraasinghe told the gathering in Colombo port where
the deal was signed.
He said the Chinese
firm will invest additional $600 million to make Hambantota port operational
while $1.12 billion from the deal will be used for debt repayment.
Hu Jianhua,
the executive vice president of the ChinaMerchants Port said the port
facilities belong to the citizens of Sri Lanka but will be a key part of
China's massive One Belt One Road initiative to build trade and transport links
across Asia and beyond.
"With
these maritime infra-structure investments, and other diverse investments such
as the proposed international maritime center, Sri Lanka will be well
positioned to play a strategic role in the one-belt-one-road initiative of
China," Hu said.
Located near
the main shipping route from Asia to Europe and likely to play a key role in
China's "Belt and Road" initiative, the Hambantota port has been
mired in controversy since the Chinese firm signed an agreement to take an 80
percent stake in the port built for $1.5 billion.
The pact
signed last year sparked widespread public anger as Chinese control of the
port, which included a plan for a 99-yearlease of 15,000 acres (23 sq miles) to
develop an industrial zone next door, raised fears the port could be used for
Chinese naval vessels.
Sri Lankan
government has revised the deal to set up two companies to split the operations
of the port and allay concerns, in India mainly but also in Japan and the
United States, that it won't be used for military purposes.
A group of
opposition members led by former leader Mahinda Rajapaksa and Marxist Janatha
Vimukthi Peremuna asked the government not to sign the agreement until it is in
parliament.
The
Hambantota port deal was scheduled to be debated on Friday, but the parliament
was adjourned to Aug. 4 after the opposition disrupted proceedings over a trade
union action.
"It is
government's responsibility to give a parliamentary debate as they abruptly
hoodwinked the debate yesterday," Dinesh Gunawardena, an opposition leader
told Reuters.
"We
have requested the president to give us a time to discuss the concerns."
Government
and diplomatic sources told Reuters that the United States, India and Japan
have raised concerns over possible military activities by China in Hambantota
port.
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