Sri Lanka signed two multi-million dollar contracts with Chinese firms for a port upgrade project on Thursday in the middle of a political hiatus that has raised doubts over the legitimacy of the government and the legality of the deals, the Reuters reported yesterday.
An official at the state-run Sri Lanka Ports Authority told Reuters it signed two contracts with Chinese firms worth more than $50 million combined on Thursday after the deals were approved by Rajapaksa’s disputed cabinet last week.
One of Rajapaksa’s cabinet ministers, speaking on condition of anonymity, also confirmed the deals had been approved by the cabinet, while documents seen by Reuters showed the deals were set to be rubber-stamped at the meeting.
The deals are a $32 million contract to enhance the deep berth capacity of state-run Jaya Container Terminal (JCT) in Colombo with China Harbour Engineering Company, and another one worth $25.7 million for the purchase of three cranes from Shanghai Zhenhua Heavy Industries for the same project, according to the ports authority official.
Asked about the deals, the former cabinet spokesperson under Wickremesinghe’s government, Rajitha Senaratne, told Reuters:
“We will have to re-examine definitely. They don’t have the legal power to decide.”
The ports authority official said the tenders for the deals had been advertised in state-owned newspapers, as is the norm in Sri Lanka, and that they were sent to a cabinet-appointed procurement panel months ago.
India, which accounts for around 80 percent of Colombo’s trans-shipment business, has raised concerns over increasing Chinese projects in Colombo.
New Delhi had been pushing Sri Lanka for the award of an estimated $1 billion contract for a second foreign-operated container terminal in Colombo.
But that deal was the subject of an argument between Sirisena and Wickremesinghe just before his ouster, in which Sirisena reportedly said the country couldn’t give any more of its assets to foreigners.
The political instability and economic malaise have raised questions over Sri Lanka’s ability to service large external debt taken to finance reconstruction following the end the civil war in 2009. It owes around $8 billion to China, official data shows.