"It was the Sri Lankan media which reported about the compensation. There was a one year postponement of the project, and they asked for compensation. We consulted legal opinion.

There had been many shortcomings in the project as per the initial agreement. We can talk lengthily if we take these matters one by one.

We have offered the Port City the status of 'financial and business district' in the Western Province Megapolis.

I could have thought other options, but then the Port City may fail. So what we proposed now is more profitable for them than the amount they ask for compensation," he said.

"Therefore we can settle this matter through negotiations. The delay of one year was not a problem because the global economy collapsed during that year.

They came up with such a demand previously, but now when they may have to reevaluate what is more worth, the compensation of USD 125 million or the status of financial and business district. Going by the new proposal they owe us more," Prime Minister Wickremesinghe said.

"Don't worry, we will give you a brand new Colombo," he said.

He said no land in the Port City would be given for outright ownership, but for a 99 year lease for the joint Company undertaking the project.

The Prime Minister said the 1,000 acres in Hambantota would also be given under a 99 year lease. (CDN)