Agreement on Hambantota Port

After many hiccups and protracted negotiations, China and Sri Lanka have reached an agreement on the US$ 1.4 billion Hambantota port in southern Sri Lanka.

According to reliable sources, the Sri Lankan cabinet will take up the agreement on Tuesday and once it gets cabinet approval, the two countries will sign the deal  within the next few weeks, presumably in early August.

As per the present understanding, the Chinese company, China Merchants Port Holdings Company (CMPort), will get 80% financial stake, and the Sri Lanka Ports Authority (SLPA), 20 %.

But after ten years, the Chinese company’s share will come down to 60%  and the SLPA’ will go  up to 40%. The 80% stake amounts to  US$ 1.2 billion.

In addition two other companies will be formed one to look after security of the port and tackle emergency situations, and the other to run the port on a day to day basis.

The stake in the administration of the port will be divided, with the Chinese company CMPort getting 49.7% and the SLPA 50.3%.

This arrangement to divide the stake on an 80:20 basis was necessitated by the fact that cash strapped and debt burdened Sri Lankan government urgently needed the US$ 1.2 billion which CMPort was to bring as its stake. (

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