Sri Lanka has officially handed over Hambantota Port to China for a 99-year lease.
A special event was organised to mark the handover, formally described as a Concession Agreement, in the port city where Sri Lankan Prime Minister Ranil Wickremesinghe handed the port over to Hambantota International Port Group (HIPG) and Hambantota International Port Services (HIPS). These two companies are set up by China Merchants Port Holdings Company and the Sri Lanka Ports Authority.
Background
Prime Minister Ranil Wickremesinghe during a visit to China in April had agreed to swap equity in Chinese infrastructure projects launched by former president Mahinda Rajapaksa in his home district.
Sri Lanka owed China USD 8 billion and with this agreement they have started to pay back the loans
Sri Lankan government grants of large tax concessions to Chinese firms. The Sri Lankan government had signed a USD 1.1 billion deal in July to sell a 70 percent stake in the Hambantota port to China.
India's Concern
The port is near the main shipping route from Asia to Europe and likely to play a major role in China’s “Belt and Road” initiative. The acquisition of the port by China has spurred particular alarm in India, which is concerned about Beijing’s growing strategic and economic footprint in the Indian Ocean region. The United States, India and Japan had also raised concerns that China might use the port as a naval base. Sri Lankan government assured India that China will use this port for civilian activities but Indian observers express concerns that Beijing could operationalize Hambantota as a resupply node for the People’s Liberation Army-Navy in the future. India is in advanced talks with Sri Lanka to operate an airport near Hambantota port
