COLOMBO — A Chinese state-owned firm has withdrawn from a $392 million joint venture to develop a major logistics hub at Sri Lanka's main seaport, the Sri Lanka Ports Authority (SLPA) said on Monday, in a setback for Chinese investment in the island nation.
(Yaani: $392 million is about Rs 3,470 crore.)
China Merchants Port Holdings was to hold 70 per cent of the proposed South Asia Commercial and Logistics Hub through its subsidiary Fortune Centre Group, while the SLPA and Sri Lankan construction company Access Engineering were each to hold 15 per cent, according to the SLPA statement and the company's filing to the Hong Kong Stock Exchange. "Following an assessment of the prevailing external circumstances, commercial considerations and the interests of the respective shareholders, a decision was reached not to proceed with the proposed joint venture," the SLPA said. China Merchants told the Hong Kong exchange that terminating the project would be in the best interests of the parties, citing changes to the project's implementation environment and timetable.
The three partners had already injected $37.14 million into the venture, including $26 million from the Chinese side. Under the settlement being prepared, the SLPA will pay $21.905 million to the project company within 30 days of the agreement taking effect — yaani about Rs 194 crore — most of which will flow back to shareholders after tax and other deductions. The SLPA said it would now pursue the 150,000-square-metre, five-storey logistics hub — planned under a 50-year build-operate-transfer concession — through a new public-private partnership chosen by competitive bidding.
The exit does not end China's presence at Colombo. China Merchants already operates the $500 million Colombo International Container Terminal and manages the deep-water port at Hambantota, which Sri Lanka handed over in 2017 under a 99-year lease for $1.12 billion after it could not repay the Chinese loan taken to build it. The logistics hub, announced in April 2023, had been billed as the first major foreign direct investment into Sri Lanka after the country defaulted on its foreign debt in April 2022 amid a severe economic crisis, and it would have taken China Merchants' cumulative investment in Sri Lanka to about $2 billion.
It is the second big investor exit from an agreed Sri Lankan project: in February 2025, India's Adani Green withdrew from a $442 million renewable-energy project in the north after the government of President Anura Kumara Dissanayake sought to renegotiate the power tariff. Ports in the northern Indian Ocean are watched closely in New Delhi and Beijing alike, and Colombo's search for a replacement investor will be tracked across the region.
Sources: AFP and The Hindu reporting via Tob News and Indo-Pacific Affairs; Splash247 reporting on the Hong Kong Stock Exchange filing; Sri Lanka Ports Authority statement.