Sri Lanka has approved a $500 million LNG plant by China Machinery Engineering Corp near a port and industrial zone controlled by China, Sri Lanka’s development and trade minister Malik Samarawickrama informed.
Sri Lanka’s Board of Investment approved investment projects of $1 billion in the first quarter, the largest of which was the LNG project in Hambantota, Reuters reported.
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The port is leased for $1.12 billion and is close the main shipping route from Asia to Europe and plays an important role in the Chinese Belt and Road initiative.
Hambantota along with a plan to acquire 15,000 acres for an industrial zone development, has raised fears that it could be used for Chinese naval ships.
Reuters notes that the US, India and Japan are concerned that China might use the port as a naval base. However, Sri Lankan said the agreement does not allow the use of the port for military purpose.