Sri Lanka's new government on Friday said it will review a $1.5 billion port deal with China Communications Construction Co Ltd over concerns about the Chinese company getting land on a freehold basis in a high security zone.
Sri Lanka's neighbor India has also raised security concerns over the project as a large portion of cargoes bound for India are transhipped through Colombo port.
"You cannot have land given on a freehold basis to another country in a high security zone. The project has to be completely looked at," Kabeer Hashim, Sri Lanka's new investment promotion minister, told reporters after taking office.
"When you sell land or give it in outright grant in a high security zone next to the port, it is a problem," he said.
New Prime Minister Ranil Wickremesinghe, during last month's presidential election campaign, said he would scrap the port project if his party came to power. Mithripala Sirisena, backed by Wickremesinghe's party, won the election to unseat former President Mahinda Rajapaksa last week.
Under the proposed deal, 108 hectares of land will be given to the Chinese firm to cover its investment costs, including 20 hectares on an outright basis and the rest on a 99-year lease.
An Indian diplomat who has knowledge of the project told Reuters the 20-hectare plot is a security concern because of the large number of India-bound cargoes that pass through Colombo port.
Chinese President Xi Jinping launched the port project, which will be built on reclaimed land in the capital, Colombo, when he visited in September last year.
Wickremesinghe's pro-business United National Party says some development deals struck by the previous government, which was heavily dependent on China for infrastructure, did not follow appropriate tender procedures and were not transparent.
The port development, which is to be built on 233 hectares of reclaimed land, would include shopping malls, a water sports area, a mini golf course, hotels, apartments and marinas.
India has become increasingly worried about China's influence in Sri Lanka. Rajapaksa's administration in November allowed a Chinese submarine and a warship to dock at Colombo, despite concerns raised by India.
By Shihar Aneez and Frank Jack Daniel (C) Reuters 2015.