New Sri Lankan government puts brakes on Chinese-backed port city

Sri Lanka’s new government today said it will comprehensively review a Chinese-backed $1.5bn deal to build a brand new port city offshore Colombo over concerns about a Chinese company controlling land in a high security zone.

"The port city project has to be completely looked at because as we’ve always spoken about security concerns," Kabir Hashim, the new Minister of Investment Promotion and Highways, told media in Sri Lanka.

He added: "We cannot have land given on freehold basis to another country in a high security zone and that is right in between the two main ports."

Work on the ambitious Colombo Port City project (pictured) was inaugurated by Chinese President Xi Jinping and former Sri Lankan President Mahinda Rajapaksa in September last year. The scheme was to be a node in China’s "Maritime Silk Road" concept, a string of ports facilitating sea travel and trade between China and Europe.

But President Rajapaksa was ousted in an election on 8 January and the man who won, his rival Maithripala Sirisena, had said during his campaign that his government would be less accommodating to Chinese interests.

The port city was to have shopping areas, water sports area, hotels, apartments, recreation areas and marinas.

Land reclamation had begun by Chinese company China Harbour Engineering Company (CHEC), a subsidiary of China Communication Construction Co. Ltd (CCCC), which was to provide the $1.5bn in financing.

Under the deal, around 20 hectares of land in the scheme was to be given as freehold to CCCC as repayment, with a further 88 hectares signed over to CCCC on a 99-year lease.

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