China Merchants Port Holdings has withdrawn from a proposed US$392 million logistics joint venture at Sri Lanka's Colombo Port, the Sri Lanka Ports Authority (SLPA) confirmed on Monday, October 19.
The SLPA said the project will continue as a public–private partnership, with a replacement developer to be selected through competitive bidding and subject to relevant approvals.
"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 port authority said.
The South Asia Commercial and Logistics Hub (SACLH) was announced in April 2023 with a 50-year concession structured as a build-operate-transfer arrangement. China Merchants was to hold 70 per cent through a wholly owned subsidiary, with SLPA and Sri Lankan contractor Access Engineering each holding 15 per cent.
Planned services at the facility included bonded warehousing, container freight stations, and cargo consolidation.
SLPA's statement described the facility as having approximately 150,000 square metres of floor capacity and put the investment at approximately US$280 million.
China Merchants disclosed the termination in a Hong Kong Stock Exchange filing on October 15.
"In view of changes in external circumstances, including adjustments to the SACLH project's implementation environment and timetable as well as the respective commercial considerations of the parties, the company has reassessed the SACLH project and concluded that terminating the project would be in the best interests of the parties," China Merchants said.
Under the settlement, approximately US$29.8 million will be distributed to the shareholders in proportion to their holdings.
China Merchants subsidiary the Fortune Centre Group is expected to receive approximately US$20.83 million, while Access Engineering and SLPA are expected to receive approximately US$4.46 million each. The project company will then be struck off or wound up.
The hub was initially scheduled to be completed by the end of 2025. In 2024, SLPA Chairman Sirimevan Ranasinghe said the project had stalled because Sri Lanka withdrew concessions for strategic development projects as part of its commitments to the International Monetary Fund after the country's 2022 economic crisis.
China Merchants retains an 85 per cent stake in Colombo International Container Terminals, which operates the port's South Terminal, and remains involved in managing Hambantota Port.