Colombo, July 1 (ECONOMYNEXT):  Sri Lanka will move its southern naval headquarters to the Hambantota port which is leased to a state-run Chinese firm under a billion-dollar deal, Prime Minister Ranil Wickremesinghe’s office said.

Wickremesinghe has made it clear in his talks with Chinese leaders that Hambantota port will not be allowed to be used for any military purposes, his office said in a statement dispelling reports that Beijing could get a military foothold there.

“The Sri Lanka navy is moving its Southern Command to Hambantota,” the statement said. “There is no need to be frightened as security of the port will be under the control of the Sri Lanka Navy.”

The state-run China Merchant Port Holdings (CMPH) last week paid the final payment of $585 million out of the $1.12 billion price for a 70 percent stake of the port. It is given out on a 99-year lease.

“Sri Lanka has also informed the Chinese that Hambantota cannot be used for military purposes,” the statement said. It did not say when the navy will carry out the relocation of its southern command to Hambantota from its present location inside the Galle harbour.

Commercial activities at the Hambantota port was expected to trigger much needed economic development in neighbouring districts, the Prime Minister’s office said.

The port built by former president Mahinda Rajapaksa with Chinese loans and commissioned in 2010 has been running at  massive losses although it straddles the world’s busiest east-west shipping route.

India and the United States are known to be concerned that China getting a foothold at the deep-sea port could give it a military naval advantage in the Indian Ocean.

Sri Lanka has signed up to President Xi Jinping’s signature foreign policy initiative, which aims to strengthen China’s land and sea trade routes.

Two Chinese submarines called at Colombo in 2014 during the final year of Rajapakse’s tenure, angering New Delhi.

The new government of President Maithripala Sirisena turned down a Chinese request in May last year for another submarine call at Colombo shortly after Indian Prime Minister Narendra Modi visited the island.

Sirisena came to power in January 2015 promising to loosen ties with China after a decade of hefty funding by Beijing under his predecessor.