The Sri Lanka Port Authority (SLPA), local conglomerate Aitken Spence and China Merchants Holdings on Thursday signed a $500 million deal to build a new container terminal at the Colombo port, the state investment body said.
Hong Kong-based China Merchants will hold 55 percent of the project, Aitken Spence 30 percent and the SLPA 15 percent respectively, the Sri Lanka Board of Investment said in a statement.
"The agreement for one of the largest foreign direct investments will strengthen Colombos status as the premier shipping hub of South Asia into the 21st century. Construction of the container terminal will commence in December," it said.
The island nation, although it structured the project with the Chinese firm last year, entered into the deal only last month when President Mahinda Rajapaksa made an official visit to China.
The three partners will operate under the China International Container Terminal joint venture company, to design, build and manage the new Colombo south terminal.
The joint venture will build the first of three planned terminals in the Colombo port. Each is expected to add the capacity to handle an additional 2.5 million Twenty-Foot Equivalent Units (TEU). The port now handles 4.5 million TEU.
China Merchants is a holding company for enterprises that develop transport and infrastructure businesses, and its main business is operating ports in China.
Sri Lanka has increasingly relied on China and Chinese companies for the financing and expertise needed for more than $6 billion worth of infrastructure investments it has undertaken since the end of a three-decade civil war in May 2009. -Reuters