China, Sri Lanka sign Hambantota Port deal

Sri Lanka's government on Saturday signed an agreement to sell a 70-percent stake in a US$1.5 billion port to China.

Sri Lanka's Hambantota Port [File Photo: Xinhua]

The deal was signed between the government-run Sri Lanka Ports Authority and the state-run China Merchants Port Holding Co. in the capital Colombo, in the presence of senior government officials from Sri Lanka and China. 

The agreement comes after a nearly six-month delay since the signing of the framework deal. According to the agreement, the Chinese company will invest US$1.12 billion in Hambantota Port, which sits close to busy east-west shipping lanes. 

Two local companies whose shares will be split between the Chinese enterprise and the Sri Lanka Ports Authority will be set up to handle the port's operations, security and services. The Chinese company will be responsible for commercial operations while the Sri Lanka Ports Authority will handle security. The lease period is 99 years.

Hambantota Port is expected to play a key role in the China-proposed "Belt and Road initiative", which links ports and roads across Asia, Africa, the Middle East and Europe in trade, economic and cultural cooperation.

The Hambotana facility is a deep-water port located on the south coast of Sri Lanka. After the first and second phases of construction, the port will have 10 berths, with a quay length of 3,487 meters, able to handle container, bulk, general, wheeled and liquid bulk cargoes from large ships.

Hambotana Port is seen as holding enormous potential for future expansion, given its proximity to South Asia and East Africa and its position as a hub port in the region, said the China Merchants Port Holding Co.