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Sri Lanka formally hands Hambantota Port to China

Photograph: Sunday Observer

The Sri Lankan government officially handed Hambantota Port to China on a 99-year lease last week, as Colombo continues to struggle to pay off massive debts.

The officially handing over is part of a move agreed in July that will see China Merchants Port Holdings Company control a 70 percent stake in the Hambantota port, with the remainder held by the Sri Lanka Ports Authority. The deal is valued at approximately US$1.1 billion, with China having made the first payment of $293 million to the Sri Lankan government. The deal will reportedly see loans owed by Sri Lankan converted into equity for China.

A cheque was handed over to Sri Lankan Prime Minister Ranil Wickremesinghe in a ceremony on Saturday.

“The money will be deposited in a special fixed deposit account and will be added to the country’s foreign reserves,” he said. “With this agreement, we have started to pay back the loans.”

The deal has sparked protests from the Joint Opposition and local Sinhalese.