China Merchants Pulls Out of $392 Million Logistics Hub in Colombo

China Merchants Port Holdings, the Chinese state-owned company, decided not to continue with the joint venture valued at $392 million aimed at developing a logistics hub at the Port of Colombo, Sri Lanka's main port. The Sri Lanka Ports Authority (SLPA) confirmed the withdrawal on Monday and noted that the project will move forward under a new public-private partnership model, with a replacement developer to be selected through a competitive tender process, subject to the relevant approvals.

The South Asia Commercial and Logistics Hub (SACLH) had been announced in April 2023 under a 50-year concession with a build-operate-transfer scheme. China Merchants was to hold 70% of the joint venture through a wholly owned subsidiary, while the SLPA and local contractor Access Engineering would each hold 15% of the remaining stake. The planned facility covered around 150,000 square meters and would include bonded warehousing services, container freight stations, and cargo consolidation. According to Baird Maritime, the SLPA put the investment at around $280 million, although the project as a whole had been valued at $392 million.

The dissolution of the joint venture included a liquidation agreement to distribute funds among the shareholders. Baird Maritime reported that approximately $29.8 million will be distributed, of which China Merchants' subsidiary, Fortune Centre Group, would receive about $20.83 million, while Access Engineering and the SLPA would each receive roughly $4.46 million. Portal Portuario, however, reported that according to audited financial statements as of December 31, 2025, the capital contributed by shareholders totaled $37 million, made up of $26 million from FCGL and $5.5 million each from Access Engineering and the SLPA, figures on which the refund will be calculated after deducting expenses and taxes.

China Merchants announced the decision in a filing with the Hong Kong Stock Exchange on October 15, citing changes in external circumstances, adjustments to the project's execution environment and timeline, as well as commercial considerations on the part of the parties involved. The company stated that ending the project was in the best interest of all parties involved, in what both sides described as an amicable exit. According to Baird Maritime, SLPA Chairman Sirimevan Ranasinghe had noted in 2024 that the project was stalled because Sri Lanka withdrew concessions for strategic development projects as part of its commitments to the International Monetary Fund following the country's 2022 economic crisis.

China Merchants Port Holdings maintains other investments in Sri Lanka: it operates a $500 million deep-water container terminal within the Port of Colombo and holds an 85% stake in Colombo International Container Terminals, which manages the South Terminal. The company also operates the deep-water port complex at Hambantota, on the country's southern coast, cited as one of the projects considered a white elephant driven by former President Mahinda Rajapaksa. China Merchants' stake in the now-cancelled project, agreed in April 2023, had been the first major foreign investment announced following Sri Lanka's economic collapse in April 2022.