The Sri Lanka Ports Authority (SLPA) has agreed to pay US$21.905 million to settle investments in a proposed China-backed logistics hub at the Port of Colombo after China Merchants Port Holdings (CMPort) decided to withdraw from the project. The termination marks the end of a major port infrastructure proposal valued at approximately US$392 million.
The proposed five-storey South Asia Commercial and Logistics Hub (SACLH) was intended to strengthen Colombo Port’s logistics, warehousing and commercial capabilities. The project was planned under a 50-year build-operate-transfer arrangement and was designated a strategic development project by the Sri Lankan government in December 2023.
CMPort held a 70% stake in the project through its subsidiary, Fortune Centre Group Limited, while SLPA and Sri Lankan company Access Engineering PLC each held 15%.
According to CMPort’s announcement to the Hong Kong Stock Exchange, the decision to terminate the project followed changes in external circumstances, the implementation environment, project timelines and the commercial considerations of the parties involved.
Under the settlement arrangement, SLPA will pay US$21.905 million to the project company in a single instalment within 30 days of signing the settlement agreement. The amount represents the bulk of the approximately US$26 million invested by CMPort’s subsidiary, after deductions for specified tax liabilities and late-payment obligations. The funds will subsequently be distributed among the three shareholders.
The project’s cancellation follows several years of delays and regulatory challenges. Its proposed tax concessions and exclusive operating rights had formed part of the investment framework, but uncertainties surrounding the implementation environment affected its progress.
Following the withdrawal, SLPA is expected to explore fresh investment proposals for the land allocated to the project. The decision could create opportunities for other investors to develop logistics and commercial facilities within Colombo Port.
The development highlights the regulatory and commercial challenges facing large-scale port infrastructure investments in Sri Lanka, while underscoring the importance of stable investment frameworks for attracting long-term international capital into maritime logistics.