This deal was reached between a high level committee headed by two senior advisors to the prime minister with representatives of the Chinese firm, Sri Lanka Ports Authority (SLPA) sources said.
The PM informed of the proposal to establish an International Financial Centre in Colombo, located within the Port City. The legal framework for the administration of the Financial Centre would make the Centre the financial and business hub not only in Sri Lanka, but in the whole Indian Ocean region.
The Sri Lankan government will enter into Public Private Partnership with China Merchants Holdings (International) Company and China Harbour Engineering Company Ltd to take over the Hambantota Port operations and complete the second phase of the Hambantota port project.
The Chinese company has agreed to pump US$.2 billion immediately to take over the 80 percent of the stake leaving only 20 percent of the Hambantota port for the state, SLPA sources said.
The excavation of Phase II basin has been completed, and the filling of the port basin with seawater began in July 2015. With the filling of the basin, the 110-metre-long cofferdam separating Phase I and II was to be removed, opening Phase II to the sea. The Phase II was estimated to cost around $750 million.
The project involves Main container berth of length 838.5m and 17m deep, multipurpose berth 838.5m/-17m, Feeder container terminal 460m long/12m deep, transition berth 208m, new oil terminal 300m and a yard area of 65Ha.
The agreement is to be signed in Colombo on or before November 22, SLPA officer added.
An agreement was signed between China Merchants Holdings (International) Company and China Harbour Engineering Company Ltdwith SLPA in 2014 for the development of Hambantota container terminal with an investment of $808 million.
The agreement allows the Project Company to operate four berths from Phase II.
The Chinese authorities have also agreed to swap equity in Sri Lankan infrastructure projects against some of the $8 billion in debt the island nation owes to China.