Colombo, Sri Lanka, photographed in September 2014 (Anuradha Dullewe Wijeyeratne/Wikimedia Commons)

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Sri Lanka threatens Chinese firm with legal action over Port City

5 March 2015 | By Rod Sweet | 0 Comments

A Sri Lankan government minister has threatened legal action against a Chinese firm if it keeps working on the $1.5bn Colombo Port City scheme, which has now been suspended.

Sri Lanka’s newly elected government is reviewing the project awarded to China Communications Construction Co Ltd (CCCC) amid allegations that Sri Lanka’s previous government breached laws and sidestepped environmental requirements in approving the deal.

The project involves development of a new “port city” on reclaimed land from the sea in Colombo. Featuring shopping malls and other amenities, the new port was to be a node in the “Maritime Silk Road” which China is developing.

In January Sri Lanka’s new government said it would comprehensively review the scheme on the grounds that it had gone ahead without cabinet approval and without following procedures.

But yesterday Sri Lanka’s Investment Promotion Minister, Kabeer Hashim, issued a warning because work by CCCC subsidiary China Harbour Engineering Company (CHEC) hasn’t stopped.

He said the Board of Investment (BOI) had last month asked it to halt the project until the investigation is over, but that construction had actually accelerated since the new government came in.

“Rightfully, they should stop. The ministry of ports will take necessary action to halt the work until this inquiry is done,” Hashim told Reuters. If they don't stop, he said, “then legal action will be instituted against them to not proceed any further.”    

CHEC started land reclamation in September 2014.

Under the deal agreed in 2013, 108 hectares would be taken over by CCCC – which is financing the project – including 20 hectares on an outright basis and the rest on a 99-year lease. India has expressed concerns about the project.

The threat of legal action will put a strain on relations between China and Sri Lanka. In recent years China has invested heavily in the island nation. For instance, CHEC is currently also building phase two of Sri Lanka’s new Mattala Rajapaksa International Airport, with funding from the Chinese government.

But the new president, Maithripala Sirisena, who was elected in January 2015, said during his campaign that he would take a tougher stance on China’s economic role in the country.

Image: Colombo, Sri Lanka, photographed in September 2014 (Anuradha Dullewe Wijeyeratne/Wikimedia Commons)