Key Takeaways
- China Merchants Port Holdings has pulled out of a USD392 million joint venture in Sri Lanka.
- The project aimed to develop a major logistics hub at Colombo Port.
- Sri Lanka Ports Authority is now seeking a new investor for the 150,000-square-metre hub.
COLOMBO: A Chinese state-owned firm has withdrawn from a significant USD392 million joint venture aimed at developing a major logistics hub at Sri Lanka’s main seaport, Colombo Port. The Sri Lanka Ports Authority (SLPA) announced the decision on Monday.
According to the SLPA, China Merchants Port Holdings had decided not to proceed with the collaboration, which was announced in 2023. The SLPA stated that the decision was based on an assessment of the prevailing external circumstances, commercial considerations, and the interests of the respective shareholders.
Under the original agreement, China Merchants was to hold 70 per cent of the proposed joint venture, while the SLPA and a Sri Lankan private construction company were each to hold 15 per cent. The project was to involve the development of a 150,000-square-metre logistics hub at Colombo Port.
The SLPA emphasized that the project would continue, but it now needs to find a new investor to take over the 15 per cent stake held by the Sri Lankan private construction company. The SLPA stated that it was actively seeking a new investor to ensure the project's continued development.
This withdrawal comes as China has been scaling back some of its investments in Sri Lanka, amid broader economic challenges faced by the country. The decision has significant implications for Sri Lanka’s port development plans and its economic ties with China.
The SLPA noted that China already has other investments in the Sri Lankan port sector, indicating ongoing economic engagement. However, the withdrawal of such a significant partner could affect the project's timeline and financial viability.
The Sri Lankan authorities are now working to secure a new investor to ensure the project's success. The SLPA stated that it was committed to continuing the project and would explore alternative investment options.
The decision by China Merchants Port Holdings to withdraw from the joint venture highlights the complexities of international business collaborations, especially in the context of changing economic and political landscapes.
