CHINA Merchant Port Holdings (CMPort) has made a payment of US$97.4 million to the Sri Lanka Ports Authority (SLPA), as the second tranche of its investment in the Hambantota port.

The January 15 payment takes the total paid by CMPort to US$389.5 million. The final payment is to be paid within six months from December 9 2017. CMPort has a 70% stake in the PPP concession, which has a 99-year lease.

Operations at Hambantota Port were officially handed over to CMPort in mid-December. Hambantota is located on the southern coast of Sri Lanka, and has ambitious plans to establish itself as a logistics centre with an associated industrial zone. Chinese companies are also involved in the construction of a new highway connecting the port with the capital city of Colombo on the west coast. The Southern Highway Extension Project is expected to be completed in 2019.

CMPort also operates Colombo International Container Terminal (CICT), which handled more than 95 million TEUs in 2016. Hambantota is expected to overtake Colombo in importance because of its better geographical location.

The heavy involvement of China in Sri Lanka's biggest infrastructure project has led to accusations that it is losing its sovereignty in pursuit of economic support from China. The government has publicly stated that there will be no military use of Hambantota, which will be purely engaged in commercial operations, including the Industrial and Logistics Zone. Sri Lanka has already given approval to the Ceylon Electricity Board to develop a 400MW liquefied natural gas power plant in the zone, in a joint venture with China Machinery Engineering Corporation.