Sri Lanka to Pay $21.905 Million to End Colombo Port Logistics Hub Project
Key Facts
Sri Lanka Ports Authority will pay project company SACLH $21.905 million in a lump sum within 30 days of the settlement agreement to end the Colombo Port logistics hub project with China Merchants Port. Sunday Times Sri Lanka reported that the amount will be paid after deducting tax and outstanding liabilities. The agreement sets a payment deadline of 30 days from the date it is signed. The payment forms part of the settlement to terminate the project, as the authority prepares to retender development of the facility. The project is thus returning to a competitive process for implementing the port logistics hub plan.
China Merchants Port attributed the termination decision to a reassessment of the project in light of changing external conditions, the execution environment and timeline, as well as the parties’ commercial considerations. The company said ending the project was in the parties’ interests. This explanation places the reasons for the decision within execution conditions and commercial interests, without attributing it to objections from the International Monetary Fund. Separately, Daily FT quoted a Sri Lankan minister as saying that the allocation of port land and the procedures followed were among the government’s objections. The government’s account remains separate from the reasons the company gave for ending the project.
The ports authority plans to offer development of the facility through a public-private partnership and open competition, subject to the necessary approvals. EconomyNext reported that the authority will launch a competitive process to select the party responsible for development. This means the project will be presented to investors again under a public-private partnership model. The available information did not specify when the tender would be launched or a timeline for its completion. The next step remains dependent on the required approvals before the competitive process begins.
Building a logistics hub at Colombo Port is a strategic objective under Sri Lanka’s national ports plan, according to the Cabinet Office. The government designated the areas of Pattenberg and Bloemendhal for development through a public-private partnership. In January 2023, the Cabinet approved a proposal for the project’s first phase, with an investment of $150 million. The proposal stipulated that Colombo International Container Terminal would carry out the first phase, after it was assessed by a negotiating committee appointed by the Cabinet. This places the project within a broader government plan to develop the port, as the authority now proposes a new implementation model.
In the market, China Merchants Port Holdings shares closed at 16.33 Hong Kong dollars on October 26, 2026, according to EL7 data. The shares closed at 17.16 dollars on October 20 and then 16.98 dollars on October 21. The close fell to 16.44 dollars on October 22 and then to 16.17 dollars on October 23. The October 26 close was above the previous session’s close recorded in the data, but remained below the October 20, 21 and 22 levels. The available information does not link the share-price movements directly to the project termination or settlement announcement.