H’tota port sale: China is flexible, says envoy

• Says it’s up to govt. to decide the stake to be given to Chinese
• But says controlling stake should be with Chinese for operational efficiency
• Asserts port without industrial zone makes little sense
• Agreement signing will only be after FR case is resolved

China is flexible on the conditions of the drafted Hambantota port agreement, Chinese Ambassador to Sri Lanka Yi Xianliang said yesterday amid the contradicting statements made by powerful cabinet ministers during the past several months.

“We are flexible. This is a decision by the (Sri Lankan) government. We never requested a definite how much portion or percentage of shares. This is totally decided by the government. China is flexible, whether it is 80 percent or 60 percent,” he said.

Xianliang was making these comments after delivering the Sujata Jayawardena Memorial Lecture organised by the University of Colombo Alumni Association at the BMICH last night, where he deviated wildly from a prepared lecture to deliver a politically-charged speech.

He said that a Chinese company, whether it is China Port Merchant Holdings (CMPH) or China Harbour Engineering Company (CHEC), should own at least 51 percent of the port for operational control and efficiency.

Both the entities are controlled by the Chinese state, which was the reason given by Finance Minister Ravi Karunanayake for not opting for an international tender in finding a party to run the Hambantota port, since government-to-government relations were preferable.

Development Strategies and International Trade Minister Malik Samarawickrama recently claimed that CMPH offered to buy 80 percent of the shares of the port for US $ 1.12 billion for 99 years, which was the best deal for Sri Lanka, compared to the CHEC deal of 65 percent of shares for 50 years for US $ 750 million.

Samarawickrama remained adamant that the current government would only go ahead with the CMPH deal, following the claims by the former President Mahinda Rajapaksa that CHEC offered a better deal, which was profitable to Sri Lanka—the deal he would have followed had he remained in power.

Xianliang further contradicted Samarawickrama’s claims that China would go ahead with the port investment, even if it doesn’t get the industrial zone.

“I don’t believe these are two issues. If no zone, the port might be a little bit difficult,” Xianliang said, after stating that it was he who suggested to both the Sri Lankan and Chinese governments to set up a special industrial zone.

The industrial zone and port together would draw up to US $ 10 billion in investments over five years, which Sri Lanka is sorely in need of, to rectify the balance of payment issues.
China is banking on the Hambantota port on its ‘One Belt, One Road’ initiative, which aims to revive the ancient land and maritime silk route, in order to ensure China’s energy security.

However, Xianliang said the port would not be profitable without an industrial zone.
However, he said that disagreements between individuals shouldn’t bloat into bilateral issues.

“Of course, I have differences with some ministers but these are not differences between two states. Both these projects will be important for Sri Lanka in the future. So we go ahead or we stop here,” he added.

He also said that the agreement, which is already drafted, would not be signed until the fundamental rights (FR) case filed at the Supreme Court claiming that the port sale is illegal, is resolved.

A fortnight ago, Karunanayake said that Sri Lanka and China are hoping to “finish off” the Hambantota port deal within the very week. Samarawickrama last December said the agreement would be signed by early January.

Xianliang said that China would not have tolerated the levels of opposition it is facing from Sri Lanka from any other country, which shows the friendship between the two nations.
“I remember the president (Xi Jingping) telling me ‘I have patience but I’m worried about our business people’,” Xianliang said.

He said that many of the investors who are hoping to relocate businesses to Hambantota and who are interested in setting up operations in the Colombo Port City are Fortune 500 companies and their CEOs prefer to invest in other countries, given the delays experienced with entering Sri Lanka.

Xianliang also reassured the residents of Hambantota by promising that China would neither go ahead with the acquisition of residential land without permission, nor acquire arable land.
He further added that he would like the support of Sri Lankan academia and students, likely referring to the active lobbying power of these circles.

He said that the relations between the two countries should depend on the people and not on ideologies or economics. (Chandeepa Wettasinghe)