Beijing to hold 70 p.c. stake in the strategic port; Opposition and trade unions dub the $1.1 billion deal as “a sellout.”

Sri Lanka on Saturday formally handed over the strategic southern port of Hambantota to China on a 99-year lease, in a deal dubbed by the opposition and trade unions as “a sell-out.”

The government’s grant of large tax concessions to Chinese firms have also been questioned by the Opposition.

Two Chinese firms — Hambantota International Port Group (HIPG) and Hambantota International Port Services (HIPS) — managed by the China Merchants Port Holdings Company (CMPort) and the Sri Lanka Ports Authority will own the port and the investment zone around it, officials said.

Prime Minister Ranil Wickremesinghe during a visit to China in April had agreed to swap equity in Chinese infrastructure projects launched by former president Mahinda Rajapaksa in his home district.

Sri Lanka owed China $8 billion, then Finance Minister Ravi Karunanayake had said last year.

‘To be major port in Indian Ocean’

“With this agreement we have started to pay back the loans. Hambantota will be converted to a major port in the Indian Ocean,” Mr. Wickremesinghe said while addressing the handing over ceremony held in parliament.

“There will be an economic zone and industrialisation in the area which will lead to economic development and promote tourism,” the Prime Minister said.

The Sri Lankan government had signed a $1.1 billion deal in July to sell a 70 per cent stake in the Hambantota port to China.

Sri Lanka received $300 million as the initial payment under the 99-year lease agreement.

The port, overlooking the Indian Ocean, is expected to play a key role in China’s Belt and Road initiative, which will link ports and roads between China and Europe.

'Will not be used as a military base'

In order to allay India’s security concerns over the Chinese navy’s presence in Sri Lanka, Mr. Wickremesinghe had earlier ruled out the possibility of the strategic port being used as a “military base” by any foreign country.