China Merchants Port Holdings has withdrawn from a proposed US$392 million logistics hub project at the Port of Colombo, with the Sri Lanka Ports Authority (SLPA) agreeing to a settlement of approximately US$21.9 million following the project’s 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 was originally planned as one of South Asia’s largest logistics complexes and 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 timeline, and commercial considerations among the parties.
China Merchants Port held a 70% stake in the project through its subsidiary, Fortune Centre Group Limited. The SLPA and Sri Lankan company Access Engineering PLC each held a 15% stake.
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. This payment, together with approximately US$7.85 million in remaining distributable cash, will be allocated among the shareholders according to their respective ownership stakes, after applicable deductions and expenses.
The proposed five-storey logistics complex received Strategic Development Project status from the Sri Lankan government in December 2023. This status provided several tax concessions, including exemptions from corporate income tax and dividend taxes for 15 years.
However, the project faced delays and implementation difficulties that prevented it from progressing as originally planned. Maritime industry publication Lloyd’s List also reported that the project encountered land-related and regulatory hurdles.
Following the cancellation, the SLPA is expected to seek fresh investment proposals for the land.
The withdrawal marks the end 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.
