Courtesy portstrategy.com

Sri Lanka’s government is seeking to reduce China Merchant Port Holdings’ stake in a strategic port project by up to a quarter as part of a renegotiation aimed at addressing public and political opposition to the deal, Reuters has reported.

China Merchants Port Holdings had been expected to pay $1.12bn for a 99-year lease on an 80% stake in Sri Lanka’s southern Hambantota port, after signing an agreement in December. However, the deal has been delayed by legal and political obstacles on the development of a nearby 15,000-acre industrial zone.

In a draft agreement seen by Reuters, the Chinese firm would still hold a majority in the port, but would agree to divest up to a 20 per cent stake to a Sri Lankan company after ten years.

The Chinese firm has been informed of the stake reduction, but is yet to make a public announcement about the new agreement.

Meanwhile, Ranga Kalansooriya, head of the government’s information department, told Reuters: There were some concerns about ownership. We were able to negotiate with the Chinese company successfully. The Chinese firm said they want the controlling share, even if it was 51 percent.”

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