The Chinese-funded, $1.5bn Port City development in Colombo, Sri Lanka is in doubt once more after Sri Lanka’s prime minister said today that the deal was signed without cabinet approval and without following procedures.
Ranil Wickremesinghe told the country’s parliament that two committees would investigate the deal after the results of an initial investigation showed irregularities, but he said that the government had not decided to stop the project.
The new investigations would probe any corruption involved in the deal, Reuters reported.
In January Sri Lanka’s new government said it would comprehensively review the port city scheme over concerns about a Chinese company controlling land in a high-security zone.Â
But confusion followed when, earlier this month, the cabinet announced the scheme would definitely go ahead.
It seems the cabinet spokesperson may have spoken out of turn, however, because today Prime Minister Ranil Wickremesinghe insisted that the comprehensive review would take place.
"All the activities of the Port City deal were done without transparency and without following many legal procedures. The agreement was signed without cabinet approval," he told parliament, reported Reuters.
He added: "If there was anything against the law while signing the agreement, if there has been any corruption, if there are any conditions detrimental to the country, we will take necessary actions."
The China Communication Construction Company (CCCC) signed a deal with the Sri Lanka Ports Authority in July 2013 to develop the port city on 230 hectares of reclaimed land just offshore Colombo.Â
CCCC’s subsidiary, China Harbour Engineering, began reclamation work in September 2014 after an inauguration ceremony attended by Chinese president Xi Jinping and Sri Lanka’s then-president, Mahinda Rajapaksa, who lost the January election.
The Sri Lankan government’s tough stance will be a concern to China, which has already invested substantially in the project. A Chinese embassy official in Colombo told Reuters that China acknowledged the government’s decision to investigate.
"But," the official said, "it is an obligation of a democratic government to respect an international bilateral agreement reached with another country by the previous government."Â
The port city is planned on 233 hectares of reclaimed land in Colombo. Under the proposed deal, 108 hectares would be taken over by China Communications Construction Co Ltd, including 20 hectares on an outright basis and the rest on a 99-year lease.
India is concerned about the scheme because it would give ownership to 20 hectares of land on a freehold basis to a Chinese state-owned company, next to Colombo port, which is a trans-shipment hub for India.