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COLOMBO - China Merchants Port Holdings and the Sri Lanka Ports Authority signed an agreement here on Saturday to develop the Hambantota Port in southern Sri Lanka.

Under the deal, the Chinese side will hold a 70 percent stake in two joint ventures to be launched to take charge of the commercial and administrative management operations of the port respectively.

After 10 years, the Sri Lankan side will gradually purchase an additional 20 percent stake, resulting in the two sides owning an equal share of 50 percent each, according to the agreement, which is valid for 99 years.

At the signing ceremony, Sri Lanka"s Minister of Ports and Shipping Mahinda Samarasinghe said, "This is a historic day for us today as Sri Lanka and China venture on a new journey to develop the Hambantota Port."

The Sri Lankan cabinet had on Tuesday approved the agreement, describing it as "a win-win situation for both countries."

Samarasinghe, at a media briefing on Tuesday, said, "We hope to strengthen the operations of the Hambantota Port which will be beneficial for Sri Lanka."

Hu Jianhua, executive vice-president of China Merchants Group, said the signing of the agreement is significant, expressing the hope that China and Sri Lanka can make continuous efforts to turn the port into an international shipping hub linking South Asia with Africa.