COLOMBO, Sri Lanka – A Chinese company said Tuesday it will resume construction of a $1.5 billion port city project in Sri Lanka, about a year after it was suspended because of questions about its environmental impact.
CHEC Port City Colombo said it welcomed the Sri Lankan government’s decision to allow the project to continue. It said a supplementary environmental impact study has been completed to “understand and fully assess the project’s impacts and mitigation measures in developing a comprehensive plan to maximize the benefits.”
The city is to be built on reclaimed land off Sri Lanka’s west coast and include a golf course, marinas, apartments, hotels and malls.
The project created disquiet in neighbouring India over the possibility China might be allowed outright land ownership. China’s influence in Sri Lanka makes India anxious because it considers the Indian Ocean region to be its strategic backyard.
Chinese President Xi Jinping inaugurated the project during a visit in September 2014 during the tenure of former President Mahinda Rajapaksa. At the time, Xi won Colombo’s support for a proposed maritime “Silk Road” link between China and Europe.
The leading company in the consortium building the port city is a major Chinese contractor, China Communications Construction Co.
Rajapaksa relied heavily on China for infrastructure projects. During his administration, China provided loans for an airport, sea port, highways and power plants, and became the largest investor in Sri Lanka.
The port city project was suspended after Rajapaksa lost an election in January 2015. The government of his successor, Maithripala Sirisena, said it wanted to review all projects to ensure they were environmentally viable and corruption-free.
Sirisena’s government has also moved to mend relations with the United States and India which were strained during Rajapaksa’s pro-Beijing administration.
The decision to continue the port project is seen as an effort to reassure China.