December 17, 2014 / 3:27 PM / 5 years ago

Sri Lanka opposition vows to scrap China port deal if wins election

COLOMBO (Reuters) - A leader of Sri Lanka’s opposition said he would scrap a $1.5 billion deal with China Communications Construction Co Ltd (601800.SS) to build a port city if the challenger to President Mahinda Rajapaksa wins next month’s election.

Opposition United National Party (UNP) leader Ranil Wickremesinghe gestures during a news conference in Colombo April 10, 2010. REUTERS/Andrew Caballero-Reynolds/Files

Chinese President Xi Jinping launched the project, which will be built on reclaimed land in the capital, Colombo, when he visited in September.

Opposition parties say that some infrastructure deals struck by Rajapaksa’s government, which has become heavily dependent on China for infrastructure, did not follow appropriate tender procedures and were not transparent.

Although still popular and likely to win a third term, Rajapaksa is facing a stiffer challenge than expected in the Jan. 8 poll since the emergence of his former health minister, Mithripala Sirisena, as the candidate of a united opposition.

“I will stop it,” opposition leader Ranil Wickremesinghe, who would become prime minister if Sirisena wins, told tourism industry officials at a meeting on Tuesday.

“We have to protect our coastal area. If the port city is built, we will lose the coastal area,” he added.

China Communications Construction Co was not immediately available to comment.

Some tourism companies are worried that the development of the port city will have an adverse impact on the beaches of the Indian Ocean island nation’s western coast, which is popular among foreign visitors.

The port city, which would be built on 233 hectares of reclaimed land, would include shopping malls, a water sports area, a mini golf course, hotels, apartments and marinas.

State media have reported that 108 hectares of the city would be reserved for China Communications Construction Co Ltd to cover its investment costs.

Sri Lanka’s central bank governor, Ajith Nivard Cabraal, who was an economic adviser to Rajapaksa when he was first elected in 2005, said the opposition’s position was unwise.

“At a time when Sri Lanka is enjoying a high confidence level and investments are flowing in, such a statement for political purposes will discourage investors,” he told Reuters.

Neighbour India has become increasingly worried about China’s influence in Sri Lanka. Rajapaksa’s administration last month allowed a Chinese submarine and a warship to dock at Colombo, despite concerns raised by India.

Reporting by Shihar Aneez; Editing by John Chalmers and Robin Pomeroy

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