Sri Lanka
Terminates US$392 Million Colombo Logistics Hub Project with Chinese Investor,
Settled for $22 mn Payment
China Merchants Port Holdings has agreed
to terminate its involvement in a planned US$392 million logistics complex at
Sri Lanka’s Colombo Port. The settlement provides for repayment of
project-related funds and the winding up of the joint venture, ending a
development launched in 2023.
·
Project Terminated: China
Merchants Port Holdings, its partners and the Sri Lanka Ports Authority (SLPA)
have agreed to terminate the South Asia Commercial and Logistics Hub project at
the Port of Colombo. The decision was announced on 15 October 2026.
·
Reason for Termination: The
parties cited changes in external circumstances, the implementation
environment, project timelines and commercial considerations. No single
political or geopolitical cause was established.
·
Project Cost: The proposed logistics complex
was valued at US$392 million and was launched in April 2023 as a major
commercial logistics infrastructure development.
·
Settlement Amount: SLPA
will pay US$21.905 million to the project company within 30 days of the
settlement agreement. The amount will subsequently be distributed among
shareholders according to their ownership interests.
·
Settlement Calculation: The
payment was calculated by starting with US$26 million and deducting US$3.9
million in value-added tax and US$195,000 in late-payment charges.
·
Additional Funds: The
project company held approximately US$7.85 million in distributable cash as
of 31 December 2025, which is also subject to shareholder distribution
arrangements.
·
Shareholding Structure:
o
Fortune Centre Group Limited, a wholly owned
subsidiary of China Merchants Port Holdings: 70%.
o
Access Engineering, Sri Lanka: 15%.
o
Sri Lanka Ports Authority: 15%.
·
Original Development Plan: The
consortium proposed a 50-year concession under a build-operate-transfer (BOT)
model, covering the financing, design, construction, development, operation and
maintenance of the logistics complex.
·
Impact on Colombo Port: The
termination removes the proposed facility from the current development
pipeline, leaving the planned additional logistics capacity unrealised under
the original consortium.
·
Financial Clarification: The US$392
million project value was the proposed investment cost, not the amount
already spent or the compensation payable for termination.
·
Future Prospects: Fresh
proposals for developing the site are expected, but no replacement investor,
financing arrangement or construction schedule has been confirmed.
·
Scope of Withdrawal: The
cancellation applies to this specific logistics hub and its associated
agreements. It does not establish that China Merchants Port Holdings is
withdrawing from all its investments in Sri Lanka.
Agreement brings
development to a close
The
Colombo logistics hub project will not proceed under its existing arrangements
after China Merchants Port Holdings, its partners and the Sri Lanka Ports
Authority agreed to terminate the development.
Announced
on 15 October 2026, the decision covers the South Asia Commercial and Logistics
Hub, a proposed commercial logistics complex within the Port of Colombo. The
termination arrangements cover the shareholders’ agreement,
build-operate-transfer agreement and site lease, alongside the orderly closure
of the project company.
Changes
in external circumstances, the implementation environment and the timetable,
together with the parties’ commercial considerations, were cited as reasons for
ending the venture. The announcement does not establish a single political or
geopolitical cause for the decision.
Settlement separates
planned investment from money committed.
Under
the settlement, the Sri Lanka Ports Authority will pay US$21.905 million to the
project company, South Asia Commercial and Logistics Hub, within 30 days of the
settlement agreement.
That
payment is to be distributed among the shareholders according to their
ownership interests. It is therefore a payment to the joint venture for
subsequent distribution, rather than a sum payable entirely to China Merchants.
The
settlement calculation starts with US$26 million and deducts US$3.9 million in
value-added tax and US$195,000 in late-payment charges.
Separately,
the project company held approximately US$7.85 million in distributable cash as
at 31 December 2025. That balance is also covered by arrangements for
distribution to shareholders.
These
amounts must be distinguished from the widely reported US$392 million project
value. That figure represented the proposed development’s investment cost; it
was neither the amount already spent nor the compensation agreed for
termination.
Consortium had planned a
major logistics complex
China
Merchants participated through its wholly owned subsidiary, Fortune Centre
Group Limited, which held 70% of the project company. Sri Lanka’s Access
Engineering and the Sri Lanka Ports Authority each held 15%.
The
ownership structure combined an international port investor, a local
engineering company and the public authority responsible for the port. The
joint venture was established to finance, design, construct, develop, operate
and maintain the facility under a public-private partnership.
Its
responsibilities extended beyond construction to the long-term management of
the proposed logistics operation. Terminating the agreements consequently ends
both the development arrangements and the operating framework envisaged for the
consortium.
The
consortium launched the project in April 2023, presenting it as a major
addition to Colombo’s commercial logistics infrastructure. At that stage, the
development was promoted as South Asia’s largest commercial logistics complex,
with a planned investment of US$392 million.
The
proposed concession ran for 50 years under a build-operate-transfer model. Its
cancellation closes that particular long-term development arrangement; it does
not by itself determine what infrastructure will eventually occupy the site.
Commercial implications
centre on the unrealised facility
For
Colombo’s logistics sector, the immediate consequence is that the proposed
complex will not be delivered by the original consortium under the agreed
structure.
Commercially,
this removes a planned source of additional logistics infrastructure from the
current development pipeline. Businesses evaluating future capacity should
therefore distinguish the cancelled proposal from facilities already operating
at the port.
The
financial settlement also provides a route for closing the venture’s
outstanding obligations. Repayment, distribution of available funds and
deregistration are separate steps from identifying a replacement development.
The
termination should not be interpreted as confirmation that China Merchants is
withdrawing from every Sri Lankan port investment. The agreements being ended
concern this logistics hub and its project company.
Future development
requires a fresh arrangement
Reporting
on the cancellation indicates that fresh proposals are expected for the
logistics development. However, that does not establish that a replacement
investor has been selected, financing secured or a new construction timetable
agreed.
Any
successor proposal would need its own commercial structure, approvals and
implementation commitments. Until those are announced, the confirmed
development is the termination and settlement of the original venture, rather
than the launch of a replacement project.