China ‘Silk Road’ project in Sri Lanka delayed amid protests over scheme, sources say
Beijing wants issues surrounding port and industrial zone scheme resolved before deal is finalised, according to sources familiar with the matter
China will delay a planned US$1.1 billion investment in a port on its modern-day “Silk Road” until Sri Lanka clears legal and political obstacles to a related project, sources familiar with the talks said, piling more pressure on the island nation.
Heavily indebted Sri Lanka needs the money, but payment for China’s interests in Hambantota port could be delayed by several weeks or months, the sources added.
After signing an agreement last December, state-run China Merchants Port Holdings had been expected to buy an 80 per cent stake in the southern port before an initial target date of January 7.
Beijing also has a separate understanding with Colombo to develop a 15,000-acre industrial zone in the same area, a deal that Sri Lanka was hoping to finalise later.
But Colombo’s plans to sell the stake and acquire land for the industrial zone have run into stiff domestic opposition, backed by trade unions and former President Mahinda Rajapaksa.
A legislator close to Rajapaksa is also challenging the government’s plans in court.