Sri Lanka has granted permission to Chinese company 'China Communications Construction' to build a vast "port city" in the island's capital city of Colombo after the project was suspended by Sri Lanka's President Maithripala Sirisena last year.   

The $1.4bn port project, which will also house a marina and a Formula One racetrack, was suspended after reports emerged that the ambitious plan could prove to be an environmental disaster. But in a fresh development, the mega project got a green signal from Sri Lanka's cabinet committee on Thursday.             

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The announcement was made via a statement released by the Sri Lankan government.

"The cabinet committee on economic management has recommended allowing resumption of the project subject to limitations and conditions stipulated in the EIA (environmental impact assessment)," the statement said.

There is no information about the conditions set by the government, but sources told news agency AFP that no major modifications have been made in the project.       

Sri Lanka's International Trade Minister Malik Samarawickrama also confirmed the news to Chinese news agency Xinhua.

"They can go ahead and start work as all our matters pertaining to the project have been resolved. Next week we will officially inform the Chinese company," the Sri Lanka minister is quoted saying.

China Communications Construction has not issued any official statement regarding the new development.   

The $1.4 bn port project was awarded to China Communications Construction under the previous government led by Mahinda Rajapakse. During Rajapakse's tenure, several other contracts were awarded to other Chinese companies to build major infrastructure projects in the island nation.

But Sirisena's government suspended and halted several Chinese-backed projects immediately after coming to power last year. The Maithripala Sirisena's government claims that the previous regime had agreed to unfavorable terms in a bid to lure foreign investment in the country.

The Sirisena's governments' decision to suspend the Chinese-backed projects was reportedly done at the behest of India. India sees China's increasing investment in its neighboring country Sri Lanka as a major security risk and also potential threat to New Delhi's vested economic interest in the island nation.  

India and China, both of whom are rising economic powers, are engaged in ongoing sort of 'cold war' that has pushed both nations in making huge economic investment in critical territories near each other. While China is in the process of building several port projects around Indian Ocean region, India is improving relation with countries that stake claim in disputed South China Sea.   

TagsSri Lanka, china, India, China Communications Construction, China and Sri Lanka, India and Sri Lanka