The amended agreement on the Hambantota Port was signed between the Sri Lanka Ports Authority (SLPA) and China Merchant Port Holdings, a short while ago in Colombo.
The $1.1 billion deal to lease the southern Hambantota port to China was inked on Saturday, after several months of delay caused by local protests and claims by opposing politicians that this would threaten national security.
Located near the main shipping route from Asia to Europe and likely to play a key role in China’s “Belt and Road” initiative, the Hambantota port has been mired in controversy since state-run China Merchants Port Holdings, that built it for $1.5 billion, signed an agreement taking an 80 per cent stake.
The pact signed last year sparked widespread public anger as Chinese control of the port, which included a plan for a 99-year lease of 15,000 acres (23 sq miles) to develop an industrial zone next door, raised fears the port could be used for Chinese naval vessels.
To help ease these concerns, Sri Lanka’s cabinet approved earlier this week a revised deal to cut the Chinese firm’s stake to 70 percent and assured the port would not be used for military purposes.
The revised deal provides for the formation of two companies to split the operations of the port. Sri Lanka will have a major stake in the firm dealing with security, while China will run the other company that will be in charge of business.
The Hambantota port deal was scheduled to be debated on Friday, but the parliament was adjourned to Aug. 4 after the opposition disrupted proceedings over a trade union action.
With inputs from Reuters