Sri Lanka to compromise on China-backed real estate project

Sri Lanka is offering a compromise that could allow a major Chinese-backed real estate project to restart after months of delays, Finance Minister Ravi Karunanayake told Reuters on Tuesday. The minister’s comments come a week before a parliamentary election in which the ruling party has an edge over an opposition led by Mahinda Rajapaksa. The China-friendly ex-president, who was ousted in January, is attempting a comeback.

The $1.4 billion Colombo port city project was suspended by President Maithripala Sirisena’s new government in March because it was found not to have the proper permits and approvals. The project, emblematic of China’s strategy of developing a maritime Silk Road from Asia to Europe, has alarmed Sri Lankas larger neighbour India which sees it as a threat in its backyard and has been sympathetic to Sirisena’s reformist rule.

One stumbling block has been the planned acquisition by Chinese developers of 20 hectares of freehold land for the waterfront project, which lies a stones throw from the business district of Sri Lankas largest city.

Karunanayake said the government was in the process of renegotiating the deal that would, if it wins the election, “help bring in a final understanding that will help bring a win-win situation”.