After 10 years of negotiations, China Merchants Port Holdings has signed a 1.12 billion dollar agreement with the Sri Lanka Ports Authority to develop the Hambantota Port in southern Sri Lanka.
Minister of Ports and Shipping Mahinda Samarasinghe says the concession agreement on Hambanthota Port, signed with the China Merchant Port Holding Company, has alleviated to a greater extent the tremendous burden of the government over the debt payments of the Hambantota Harbor.
According to the deal, the Chinese side will hold a 70 percent stake in two joint ventures to be launched to take charge of the commercial and administrative management operations of the port respectively, Xinhua reported.
After 10 years, the Sri Lankan side will gradually purchase an additional 20 percent stake, resulting in the two sides owning an equal share of 50 percent each, according to the agreement, which is valid for 99 years.
The Sri Lankan cabinet had on Tuesday approved the agreement, describing it as "a win-win situation for both countries."
Minister Samarasinghe said the harbor construction to the current level was carried out through obtaining a commercial loan amounting to Rs. 183 billion. He added that the Sri Lanka Port Authority has repaid a debt of 47 million rupees since the year 2011.
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He said the surrounding districts will be able to reap the fruits of further development for several decades. The agreement enables to proliferate the development to the Southern Province hitherto restricted to Western Province.
Minister Mangala Samaraweera said that in addition to the US$ 1.12 billion further 600 million US dollars will be spent to modernize the Hambantota harbor considered as the largest swimming pool of the world.
He added that 300,000 - 400,000 direct and indirect employment opportunities will be provided. The investors have shown great interest to establish cement, iron industries and refineries using latest technology.
The Minister further said that investors, not only from China, but also from India, Japan and Europe will also be provided opportunity to invest in these ventures.
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