COLOMBO: In response to desperate pleas from the highly indebted Sri Lankan government, China has agreed to convert Sri Lanka’s debt in at least one major non-performing project into equity, so that the enterprise is run on a commercial, profit making, joint venture basis.
Sri Lanka’s Finance Minister, Ravi Karunanyake, told the media on Thursday, that a Chinese company has agreed to convert a debt of US$ 1.1 billion incurred for the construction of the Hambantota Port, into 80 per cent equity and to run the project as a commercial venture jointly with the government of Sri Lanka.
Karunanayake did not reveal the name of the Chinese company but said that the deal is to be signed in the coming week.
Prime Minister Ranil Wickremesinghe has already said that a Chinese partner has been found to take over the debt incurred in constructing the Mattala Airport (known as the world’s emptiest airport) into equity and run it on a commercial basis jointly with the Sri Lankan government.
Sri Lanka owes to China a staggering US$ 8.4 billion.
Karunanayake said that the conversion of debt into equity in Humbantota port and Mattala airport with Chinese participation, will secure investments of over US$1.1 billion. To make the port and the airport work ,government has got the Chinese to invest in an Economic Zone in the area spread over 15,000 acres. International companies ,including Indian companies, have been contacted to invest in the zone.