Sri Lanka has reached agreement to sell 80 percent of Hambantota port to China though a joint venture an option to reduce the Chinese stake to 60 percent in 10 years, Deputy International Trade Minister Sujeewa Senasinghe said.
CM Port Holdings is expected to pay Sri Lanka 1.12 billion for the 80 percent stake.
Sri Lanka has borrowed 1.4 billion dollars mostly from China to build a breakwater, jetty and a tank farm, which the state-run Sri Lanka Ports Authority has to service through other revenues.
Senasinghe said investments for the third stage terminals and cranes will be made by China and Sri Lanka will not have to put cash.
There would be an option for China to sell back 20 percent of the port to Sri Lanka in 10 years. It is not known what price Sri Lanka will have to pay to get it.
Senasinghe said a concession agreement will be signed in the near future without giving a date.
Other ministers have indicated that a stake will be offered on the stock exchange within months for a private party to buy.
China is to get the entire port infrastructure including an artificial island which will be vested in a newly incorporated subsidiary of Sri Lanka Ports Authority through a 99-year lease.
Port Minister Arjuna Ranatunga has said such a structure was against the governing law of the ports agency.
Following international practice, Sri Lanka’s Colombo port has leased terminal space through concession agreements with the port infrastructure itself being in the port agency.
The opposition has alleged corruption for selling the entire port for 99-years, through an unusual structure, unlike the 30 to 40 years that is the normal practice.
Senasinghe denied that there was any corruption.
The deal with China will free the government of the burden of investing further.
The sale will also help reduce the debt burden, government ministers have said.
However some critics alleged that it is a falsehood and the loan will continue to be serviced by the people of Sri Lanka.
According to reports the money will be used to build foreign reserves. (LBO)
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