Colombo, July 30: Sri Lanka has signed a deal to sell 70% stake in its Hambantota Port to China for $1.1 billion. The deal was delayed by months as there were concerns that this strategic deep sea port could be used by the Chinese Navy.
Sri Lankan Ports Minister Mahinda Samarasinghe told journalists that Sri Lanka cannot afford to continue to pay back the loans without better returns at the port.
The government has given assurances that China will run only commercial operations from the port, on the main shipping route between Asia and Europe.
Sri Lanka's government said money from the deal will help repay foreign loans. Under the proposal, a state-run Chinese company will have a 99-year lease on the port and about 15,000 acres nearby for an industrial zone.
Neighbouring India has also voiced concerns that China could use the deep sea port in the Indian Ocean to dock military vessels. Sri Lanka has assured India that there are no security issues over the port, which it says will only be used for commercial purposes.
Lankan government argues that the port has been underused since its opening in 2010. The construction cost more than $361m, with the Export-Import Bank of China providing a large chunk of financing.