Sri Lankan govt give Chinese company 50-year exclusivity for port logistics venture

The public-private venture on build, operate, and transfer (BOT) terms, involves Sri Lanka Ports Authority (SLPA), and civil engineers Access Engineering Plc as minority shareholders, reports The Sunday Times.

SLPA is not allowed under the BOT agreement, “to grant any third party the right to carry out port-related logistics or warehousing services at the Port of Colombo at a rate lower than the royalty fees payable by the project company”, filings by China Merchants Port show.

China Merchants Port has set up a fully-owned subsidiary, Fortune Centre Group Limited (FCGL) to build and run the ‘South Asia Commercial and Logistics Hub’.

FCGL, a private limited liability company incorporated in the British Virgin Islands, gets the rights to name the chairman, managing director/chief executive officer, and appoint five directors, to the project company, ‘South Asia Commercial and Logistics Hub Limited’, while Access Engineering and SLPA can name one director each, the newspaper reported.

According to the shareholder agreement, FCGL will commit US$ 58.8 million cash to the Sri Lanka incorporated ‘South Asia Commercial and Logistics Hub Limited’, which will have an issued share capital of US$ 84m, China Merchants Port filings show.

China Merchants Port also owns 85 percent of the Colombo International Container Terminal (CICT) of the Port of Colombo. SLPA has a 15 percent interest in CICT.

According to China Merchants Group’s annual filings for 2022, CICT handled 3.2 million containers. The group also notes a 10.44 million yuan (Rs 465m) dividend payable to SLPA.