COLOMBO: India will convey to Sri Lanka its strategic concern over the latter’s proposal to enter into a “debt-equity swap” with China, converting its US$ 8 billion debt to China into equity, to turn around the non-functioning Chinese funded mega infrastructure projects.
The issue will be taken up when Malik Samarawickrama, Development Strategies Minister and confidante of Prime Minister Ranil Wickremesinghe, visits India at the latter’s invitation sometime in May-June.
India fears that the debt-equity swap will result in strategic assets like the Hambantota port and the Mattala airport going into the hands of China, which could use it for military purposes.
Long aware that Lanka might seek such a swap because of its inability to make the projects earn money and to repay the high interest carrying loans, India had warned the earlier Rajapaksa regime too, but to no effect. Wickremesinghe himself proposed a swap when he visited China in early April.
But the cautious Chinese only said that they would “explore” a swap. The official Chinese Global Times had warned about taking over unviable assets and trying to run them as joint ventures in an unsuitable work culture.
India might urge Lanka to explore the possibility of giving the assets to a strategically neutral international consortium to run.
During Samarawickrama’s visit, India will seek facilities for Indian private sector investment. It is especially eyeing participation in the proposed Third Terminal at Colombo port.