China has called for fast-tracking negotiations with Sri Lanka over the USD 750 million second phase of the Hambantota port which in the past caused unease in India over concerns that the project is part Beijing's 'string of pearls'strategy to contain it.
Chinese Premier Li Keqiang, during talks with his Sri Lankan counterpart Ranil Wickremesinghe, said both sides should speed up the negotiations on the second phase operation of the Hambantota Port in the southern part of Sri Lanka. The first phase was completed in 2014 at a cost of USD 361 million.
Li said the port will give Sri Lanka full play to its geological advantage to become an important international logistic hub. The second phase of construction is expected to cost over USD 750 million.
Hambantota, the home of former Sri Lankan President Mahinda Rajapaksa, aims to service ships travelling along one of world's busiest shipping lines -- the east-west shipping route.
When the three phase project is completed, it will become the biggest port on South Asia with 4,000 acres of service area with provision to accommodate 33 vessels at a time.
The scale of the project evoked concerns in India that it could be part of China's 'string of pearls' strategy to corner India.
China, which has been building various ports in different countries including Myanmar, Bangladesh and Pakistan, has denied having such a strategy.
During their meeting yesterday, Wickremesinghe and Li also discussed the construction of an industrial park in Hambantota.
Li also welcomed Sri Lanka's decision to lift ban on the construction of the Chinese funded USD 1.5 billion Colombo Port City Project.
China will work together with Sri Lanka to push forward resumption of the delayed construction of the port city project in Colombo, Li told Wickremesinghe here yesterday.
"We welcome the resumption of the Colombo Port City Project and stand ready to work with Sri Lanka to push forward the construction steadily," Li said.
The Sri Lankan government officially informed the Chinese investors of resuming the construction of the multi-billion dollar port city project last month, one year after its suspension.
Wickremesinghe also assured Li to "speed up" the construction of the controversial China-funded Colombo Port City Project which his government stalled for an year over environmental concerns.
China has been setting up a series of ports across the Indian Ocean rim referred to experts as 'string of pearls' which many see as an attempt to contain India.
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Both sides agreed to speed up the construction of the 583 acre the Colombo Port City (CPC) project to be built by a Chinese state owned company on reclaimed land which was stalled after the Maithripala Sirisena government came to power last year.
It was halted over concerns relating to its environmental impact. The project was finalised during the Rajapaksa regime.
"On CPC, both sides agreed to further speed up over all and comprehensive resumption of the work at this project," Xiao Qian, Director General of the Asia Department of the Chinese Foreign Ministry told the media while briefing over the outcome of the meeting between the two Prime Ministers.
He said Sri Lanka has already made the announcement to resume work.
"Now we will go into further technical details," Xiao said.
While there is no clarity on the technical details, reports from Colombo quoted Sri Lankan officials as saying thatthe China Communication Construction Company (CCCC), which undertook the project is demanding USD 125 million penalties (USD 3.80 lakh penalty a day) as damages for stalling the project.
Sri Lankan officials also said Colombo wants relief as it is struggling to service USD eight billions obtained during the Rajapaksa regime for various projects.
Reports said Wickremesinghe, who before his election had threatened to scrap the CPC for adverse environmental impact, is due to negotiate the penalty payment in his talks with Li.
The Sirisena government had earlier expressed serious reservations over the clause in the agreement to hand over 20 hectares of land to the CCCC on freehold basis with complete rights.
The project had created disquiet in India over the growing Chinese presence in Sri Lanka. India has also not yet endorsed the Maritime Silk Road proposal because of its strategic concerns over the Chinese domination in the Indian Ocean - often regarded as India's backyard.
Elaborating further on the talks on CPC, Xiao said, "this is an important project and both the countries have strong desire to further enhance and advance this project. On the Chinese side we hope to see earlier possible resumption. We believe it will come up very fast."
Before embarking on his visit to Beijing, Wickremesinghe told the Chinese media in an interview that CPC will be given a special status as a unique financial and business district with laws of its own.