* Govt: new deal has no link to hotel project
* Govt last month cancelled $500 mln hotel deal
* Opposition: someone benefiting from deals
COLOMBO, Nov 3 Sri Lanka awarded China National
Aero Technology Import and Export Corporation (CATIC) an $89.6
million contract, barely a week after annulling a $500 million
hotel deal with the state-run Chinese conglomerate.
The hotel deal was among the largest foreign investments
since Sri Lanka won a quarter-century civil war in 2009, and its
cancellation was a rare victory for the main opposition United
National Party (UNP), which questioned it in a parliament
dominated by President Mahinda Rajapaksa's ruling party.
Cabinet spokesman Keheliya Rambukwella said the new
contract, to relocate a university, was not a quid pro quo or
compensation for the hotel deal's collapse.
"That's a different deal and they must have come with the
full funding when the tenders were called," for the university
project, he told a press briefing.
The new project is to relocate the University of Moratuwa's
Institute of Technology to new campus and the $89.6 million cost
will be funded by the Chinese government, Rambukwella said.
Sri Lanka is borrowing heavily to fund a $6 billion plan to
develop infrastructure neglected during the war. China was the
Indian Ocean nation's largest lender in 2009 and 2010, giving a
combined $2 billion during those two years.
UNP legislator Harsha de Silva, the main critic of the CATIC
project, said the university deal was yet another Chinese
project that would cost Sri Lanka's economy dearly.
"This is a typical economic hitman story. When we can't do
things, China is asking for flesh. I think either the government
doesn't see this or some people are benefiting from these kind
of deals," de Silva told Reuters.
The CATIC hotel deal's cancellation was a rare case where
China, a major ally, appeared not to get its way in Sri Lanka.
Officially, Rajapaksa questioned why the land for the hotel
on the colonial-era Galle Face seafront was being sold instead
of given on a long-term lease. CATIC balked at the change in
terms, having already paid $54.5 million.
The government says it is negotiating to give CATIC another
property, and is in talks to lease the Galle Face land to
another party, which it declined to name, to build a hotel.
CATIC is primarily a weapons manufacturer, but has other
interests including in hotels.
What remains unclear is why the government has not also
changed the terms of a similar $500 million hotel, shopping and
apartment project with Shangri-La Asia Ltd , which paid
$125 million to buy 10 acres next to the 6 acres CATIC wanted.
(Additional reporting by Shihar Aneez; Writing by Bryson Hull;
Editing by David Holmes)