Sri Lanka warms up to $1.4-bn China-backed port project

Sri Lanka, which suspended a $1.4-billion infrastructure project under Chinese assistance after the Sirisena government came to power, has now come up with a compromise formula that could allow a major Chinese-backed port-cum-real estate project to restart after months of delays.

Quoting finance minister Ravi Karunanayake, Reuters on Monday reported that the move comes a week before a parliamentary election in which the ruling party has an edge over the opposition led by former president Mahindra Rajapaksa.

President Maithripala Sirisena's new government suspended the $1.4 billion Colombo port city project in March because it was found not to have the proper permits and approvals.

The project stumbled over the planned acquisition by Chinese developers of 20 hectares of freehold land for the waterfront project close to the business district of Sri Lanka's capital Colombo.

The port city project is funded by China Communications Construction Co Ltd (CCCC) and locally handled by CHEC Port City Colombo (Pvt) Ltd.

The project to build apartments, shopping malls, a water sports area, a golf course, hotels and marinas is suspended a CCCC had estimated the shutdown to cause losses of more than $3,80,000 a day.

The project would give the Chinese company 108 hectares of land in the form of payment, 20 hectares of it outright and the rest on a 99-year lease.

The government is in the process of renegotiating the deal that would, if it wins the election, ''help bring in a final understanding that will help bring a win-win situation,'' the report quoted Karunanayake as saying.

''Freehold will certainly be changed into a mutually holding type of a situation, so that there is no person that will control land in another country,'' he said. ''You don't need to have a company holding national lands for perpetuity.''

The Sirisena administration has suspended most foreign-backed infrastructure projects that, it says, were overpriced and financed on onerous terms harmful to Sri Lanka's national interests.

The China-friendly ex-president, who approved the project, is now attempting a comeback on a so-called development plank.

The project is part of China's strategy of developing a maritime Silk Road from Asia to Europe. India, however, sees it as a threat in its backyard and has been sympathetic to Sirisena's reformist rule.