China Built $500mn Container Terminal in Sri Lanka Opens for Business

Sri Lanka will open a $500 million container terminal at Colombo Port on 4 Aug, the biggest investment in the island’s harbours, as the nation seeks to upgrade its infrastructure with Chinese help.

The terminal, built and operated by China Merchants Holdings International Co. (144), will handle 2.4 million containers a year and boost Colombo’s capacity by almost half, according to the Sri Lanka Ports Authority. President Mahinda Rajapaksa will inaugurate the facility.

The new terminal is part of Sri Lanka’s plan to add 7.2 million boxes of capacity and deeper berths at its main port to attract larger vessels. As Rajapaksa seeks investments after the end of a three-decade civil war, China is tightening its embrace of the island by committing at least $3.7 billion since 2005 to help expand ports to power generation.

Colombo’s three existing terminals have the capacity to handle 5 million 20-foot equivalent units. China Development Bank provided a $350 million loan to China Merchants in May 2012 for the Colombo terminal, in which the Hong Kong-based port operator holds an 85 percent stake. State-run Sri Lanka Ports Authority owns the balance.

The Export-Import Bank of China has funded investment projects including Sri Lanka’s first four-lane expressway, second international airport and a port in Hambantota city. Japan and India are also seeking closer ties with Sri Lanka as the island lies on the main shipping lanes connecting the Far East, West Asia, Africa and Europe.

Sri Lanka is seeking economic growth of 7.5 percent this year, after its expansion cooled to 6.4 percent in 2012 as a faltering global economy sapped demand for the nation’s tea and textiles. The country is experiencing a resurgence in tourism after the nation’s armed forces defeated separatist rebels in May 2009.