> ## Content Index > Fetch the complete content index at: https://www.jaffnamonitor.com/llms.txt > Use this file to discover other available public pages before exploring further. # China Merchants Port Abandons $392 Million Logistics Hub at Colombo Port - URL: https://www.jaffnamonitor.com/china-merchants-port-abandons-392-million-logistics-hub-at-colombo-port/ - Published: 2026-10-18T17:33:37.000Z - Updated: 2026-10-18T17:33:37.000Z - Author: Our Reporter - Tags: October 2026 **COLOMBO, Sri Lanka, Oct. 18 —** China Merchants Port Holdings, the Chinese state-controlled port operator, has abandoned its plan to build a $392 million (about Rs. 130 billion) logistics complex in the Port of Colombo. The project had been billed as the largest of its kind in South Asia and had stalled for more than three years. In a filing to the Hong Kong Stock Exchange on Oct. 15, the company said the parties had agreed not to proceed. It and its partners signed a settlement ending the shareholders’ agreement, the build-operate-transfer contract and the site lease, effective immediately. The company gave its reasons in the filing. It cited changes in external circumstances, including shifts in the project’s implementation environment and timetable, as well as each party’s commercial considerations. After reassessing the project, it concluded that termination was in the best interests of all sides. It said the settlement followed discussions with the Sri Lankan government and was reached on principles of “amicable consultation and neutral handling.” ## The Settlement According to the project company’s audited accounts as of Dec. 31, 2025, the shareholders had contributed $37.14 million (about Rs. 12.3 billion) in cash. Fortune Centre Group, a wholly owned China Merchants subsidiary registered in the British Virgin Islands, put in $26 million (about Rs. 8.6 billion). The Sri Lanka Ports Authority and Access Engineering, a Colombo-listed construction company, each contributed $5.57 million (about Rs. 1.84 billion). Under the settlement, the ports authority agreed that the $26 million is payable back to the shareholders, after deductions for tax and late-payment liabilities. Those deductions include a $3.9 million (about Rs. 1.29 billion) value-added tax bill that the authority has already paid. The authority will pay the remaining $21.905 million (about Rs. 7.25 billion) as a lump sum within 30 days of the agreement. The authority will pool that payment with about $7.85 million (about Rs. 2.6 billion) in cash left in the project company and divide it according to ownership. The China Merchants subsidiary will receive about $20.83 million (about Rs. 6.89 billion). Access Engineering and the ports authority will each receive about $4.46 million (about Rs. 1.48 billion). Each shareholder will recover roughly 80 percent of what it put in. The company’s board, including its independent directors, said the terms were fair and reasonable. ## Who Pays, and How It Could Be Recovered The ports authority stands on both sides of the settlement. It pays the $21.905 million, and as a 15 percent shareholder it receives $4.46 million back. Its net cash outlay is therefore about $17.4 million (about Rs. 5.77 billion). The $26 million being refunded matches the upfront payment that China Merchants Port said in 2023 would follow the signing of the agreements. The filing does not say how the ports authority will fund the refund. Officials have not said whether the money will be recovered from the next investor. The authority is preparing to offer port land for a new logistics venture. In May, its chairman, Parakrama Dissanayake, said it would invite expressions of interest for a logistics hub on a 14-acre parcel inside the Port of Colombo. In September, he said the authority would launch a logistics hub with free-zone and bonded warehousing facilities within two to three months. He has not said whether that parcel is the site of the abandoned project, which covered 5.3 hectares, or about 13 acres. The 2023 deal shows one way a new concession could bring money back to the authority. That deal required the project company to pay the authority a lump sum of $14 million (about Rs. 4.63 billion) in royalties within 90 days of all its conditions being met. Officials have not said whether any new concession would include an upfront payment or royalty large enough to offset the refund. ## A Flagship Deal That Never Broke Ground Officials signed the agreements in Colombo in April 2023\. They called for a 50-year build-operate-transfer project with an eight-floor warehouse offering 530,000 cubic meters of storage, built in the center of the port. China Merchants Port held 70 percent of the venture, with the ports authority and Access Engineering holding 15 percent each. Construction was to begin in the second half of 2023 and finish by the end of 2025. At the signing, China Merchants Port said the project would bring a $126 million (about Rs. 41.7 billion) infusion on top of the $26 million upfront payment. Its parent, China Merchants Group, said the hub would take its cumulative investment in Sri Lanka above $2 billion (about Rs. 662 billion). It was the first major foreign investment in the country since Sri Lanka defaulted on its foreign debt in 2022. The terms drew criticism from the start. Sri Lanka gave the project company 50 years of exclusive rights. Under those rights, the ports authority could not let any third party provide port logistics or warehousing services in Colombo at rates below the royalties the project company paid. Ports trade unions accused the government of handing over 5.3 hectares of prime port land without a competitive tender. ## Concessions and Delays In December 2023, Sri Lanka gazetted the hub as a strategic development project, granting 15-year exemptions from corporate income tax and dividend tax. The Sunday Times reported this week that it found no record that the gazette had been revoked. The project still did not move. In 2024, Sirimevan Ranasinghe, then chairman of the ports authority, said it had stalled because Sri Lanka had withdrawn its strategic development project concessions under commitments made in its International Monetary Fund program. He said the parties had then discussed granting concessions through a separate agreement with the Board of Investment. Lloyd’s List, the shipping journal, reported that the project ran into land and regulatory hurdles. Sri Lankan officials signaled the end months before the filing. In May, the Board of Investment’s director general, Renuka M. Weerakone, said the project would not go ahead and that the ports authority would invite fresh proposals for the land. Mr. Dissanayake said the authority was examining that option. ## Other Ventures in Sri Lanka China Merchants Port remains active in Sri Lanka through other ventures. It is the parent of Colombo International Container Terminals, which operates the port’s South Terminal, and it has held a 99-year lease on the southern port of Hambantota since 2017. The Colombo terminal venture explains why the settlement had to be disclosed. The ports authority owns 15 percent of that terminal company, so Hong Kong listing rules treat it as a connected person of China Merchants Port, and the settlement counts as a connected transaction. The company said the deal fell below the 1 percent threshold for disclosure. It made the announcement because it was ending earlier connected agreements ahead of schedule. The Port of Colombo handled 8.3 million containers, measured in 20-foot equivalent units, in 2025, Mr. Dissanayake said in May. He told shipping agents in September that volumes rose about 12 percent in the first half of 2026, putting the port on course to handle close to nine million units this year.