Chinese plan to build $1.4bn Port City in Sri Lanka “to resume in February”

The government of Sri Lanka is set to reverse its decision to block a Chinese-funded port development in Colombo, according to a report in China’s state news agency, Xinhua.

Xinhua quotes an anonymous source in the Sri Lankan government as saying that the $1.4bn Port City scheme is likely to resume in February following discussions between the two governments.

Xinhua’s source said the necessary documents to resume work, including the environmental management plan, had been submitted to the Sri Lankan government and were under review.

President Maithripala Sirisena

Work on the scheme began September last year under the regime of President Mahinda Rajapaksa but the new government of President Maithripala Sirisena (pictured) suspended the project and launched a comprehensive review into it after winning the election in January this year.

During his election campaign Sirisena said he would pivot away from China and towards India and the West.

Since then China has been lobbying to have the project, considered a vital part of its planned Maritime Silk Road, restarted.

The Sri Lankan cabinet last month agreed to set up a fresh committee to review the port city during a visit by China’s vice minister of foreign affairs, Liu Zhenmin.

The port, which was to be built on reclaimed land by China Harbour Engineering, a subsidiary of the China Communications Construction Company, was to have been the centre of a commercial mixed-use development that was seen as important for the economy of the entire island.

Razeen Sally, an associate professor at the National University of Singapore, told Bloomberg recently that the scheme had a "pretty strong commercial logic" and that China had "ample funds".

As well as Colombo Port City, China Harbour Engineering and Sinohydro are conducting a feasibility study into turning Hambantota Port in the south of the island into the largest in south Asia, with a shipbuilding yard and enough wharfs to berth 33 vessels.

The $360m first phase of the port was opened in 2010, and was financed by the Export Import Bank of China.

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