China Merchants Port Holdings has withdrawn from a proposed US$392 million logistics hub project at the Port of Colombo, with the Sri Lanka Ports Authority (SLPA) agreeing to a US$21.9 million settlement following the cancellation.
The Chinese port operator confirmed the termination of the South Asia Commercial and Logistics Hub (SACLH) project in a filing to the Hong Kong Stock Exchange on October 15, 2026.
The project, originally planned as one of South Asia’s largest logistics complexes, was to be developed under a 50-year build-operate-transfer arrangement.
According to the stock exchange filing, the decision to abandon the project followed changes in external circumstances, adjustments to the project’s implementation environment and timetable, and commercial considerations among the parties.
China Merchants Port held a 70% stake in the project through its subsidiary, Fortune Centre Group Limited, while the SLPA and Sri Lanka’s Access Engineering PLC each held 15%.
The three shareholders had invested a combined US$37.14 million in the project, including US$26 million contributed by the Chinese company’s subsidiary.
Under the settlement agreement, the SLPA will pay US$21.905 million to the project company within 30 days. The payment, together with approximately US$7.85 million in remaining distributable cash, will be allocated among the shareholders according to their ownership stakes, after applicable deductions and expenses.
The proposed five-story logistics complex was granted Strategic Development Project status by Sri Lanka in December 2023, providing several tax concessions, including exemptions from corporate income tax and dividend taxes for 15 years.
However, the project encountered delays and implementation difficulties, preventing it from progressing as originally planned.
According to maritime industry publication Lloyd’s List, the project also faced land and regulatory hurdles.
The SLPA is expected to seek fresh investment proposals for the land following the cancellation.
The withdrawal marks the collapse of a major planned foreign investment in Sri Lanka’s port logistics sector, which was intended to strengthen Colombo’s position as a regional shipping and logistics hub. (Newswire)
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