‘Proposed agreement between Sri Lanka govt. and Chinese firm is not in sync with existing rules’

It is not just New Delhi or Washington that is worried about Colombo’s proposed deal to sell a deep-sea port in Hambantota to a Chinese company. Sri Lanka’s ports authority has “fundamental concerns” over the proposed deal, its Chairman Dammika Ranatunga said.

While the Sri Lanka Ports Authority (SLPA) appreciates the importance of foreign investment, it would only “go by the book”, Mr. Ranatunga told The Hindu. “We took a careful look at the [draft] agreement — it violated the SLPA Act, and the terms were not conducive to us,” he said, adding that even after 10 revised drafts of the agreement, factoring in some of SLPA’s observations, many concerns remained.

Contentious clauses

Last week, the SLPA raised the matter again with a ministerial committee overseeing the agreement, flagging key clauses that reportedly ignored the Authority’s observations. The chairman’s remarks come ahead of Prime Minister Ranil Wickremesinghe’s scheduled visit to Beijing.

Mr. Wickremesinghe is keen on signing the agreement and the latest version of the concession may come up for discussion at Tuesday’s cabinet meeting, political sources told The Hindu.

“Just because someone puts a billion dollars in front of you it doesn’t mean you give everything away,” said Mr. Ranatunga, brother of Ports Minister and former cricket Arjuna Ranatunga. Critics have in the past questioned his qualification to be appointed chairman.

After signing a framework agreement with the Sri Lankan government in December 2016, the state-run China Merchants Port Holdings was expected to pay $1.12 billion for a 99-year lease, on an 80% stake in the Hambantota port. The port, built with Chinese loans in 2010, was part of Beijing’s plans to create a Silk Route across Asia. Finalised and completed when ex-President Mahinda Rajapaksa was in power, the port was termed a “white elephant” by his successor government that came to power in 2015.

Government politicians negotiated a new deal and pitched it to the public as one aiming to reduce the burden of the $8 billion-debt Sri Lanka owes China.

However, observing that the proposed deal gave sweeping powers to the Chinese company to handle operations near the port, Mr. Ranatunga asked: “What does that mean? Can that be a military base,” pointing to Chinese investment in African countries that had sparked “similar concerns”.

Colombo and Beijing also agreed to develop a 15,000-acre industrial zone near the port, and Beijing is now willing to sign the port deal, only if land for the industrial zone is made available. However, locals have been resisting the project.