Sri Lanka hands over its Hambantota port to China for 99 years lease

Colombo, December 10: In one of the rare events, Sri Lankan authorities have handed over the southern sea port of Hambantota to China on a 99-year lease. The move was an attempt to pay China back USD 8 billion that Lanka owed the Asian nation.

“With this agreement we have started to pay back the loans. Hambantota will be converted to a major port in the Indian Ocean,” Wickremesinghe said while addressing the handing over ceremony held in parliament.

“There will be an economic zone and industrialisation in the area which will lead to economic development and promote tourism,” the prime minister said.

The government’s grant of large tax concessions to Chinese firms have also been questioned by the opposition. The opposition and trade unions have dubbed the deal as a sellout of the country’s national assets to China.

The Sri Lankan government had signed a USD 1.1 billion deal in July to sell a 70 percent stake in the Hambantota port to China.

Sri Lanka received USD 300 million as the initial payment under the 99-year lease agreement which the opposition had described as a sellout.

The port, overlooking the Indian Ocean, is expected to play a key role in China’s Belt and Road initiative, which will link ports and roads between China and Europe.

In order to allay India’s security concerns over the Chinese navy’s presence in Sri Lanka, Wickremesinghe had earlier ruled out the possibility of the strategic port being used as a military base by any foreign country.

Lankan government argues that the port has been underused since its opening in 2010. The construction cost more than $361 million, with the Export-Import Bank of China providing a large chunk of financing.