China Merchants Port Holdings, the Sri Lanka Ports Authority and Access Engineering PLC have agreed to abandon the South Asia Commercial and Logistics Hub in the Port of Colombo, a project announced three and a half years ago as the largest commercial and logistics complex in South Asia.
Under a settlement agreement signed by the three partners, the Daily FT reported, the shareholders will recover about $29.8 million of the $37.1 million they had put into the project company in cash. The agreement ends the Shareholders Agreement, the Build-Operate-Transfer Agreement and the Site Lease Agreement early, and settles all matters relating to the project with immediate effect.
The Sunday Times, reporting from the announcement filed with the Hong Kong Stock Exchange, puts the Ports Authority’s own obligation at $21.905 million, payable to the project company as a lump sum within 30 days of the settlement.
Four numbers, and what each one measures
The figures reported across the two accounts are not competing claims. They measure different things, and they reconcile.
| Figure | What it is |
|---|---|
| $392 million | The investment announced when the agreements were signed, reported by the Daily FT in April 2023 |
| $37.1 million | What the shareholders actually contributed in cash, per the project company’s audited accounts to 31 December 2025 |
| $29.8 million | What they get back under the settlement |
| $21.905 million | The Ports Authority’s lump-sum payment, which is the largest component of the $29.8 million |
The Ports Authority’s payment is the $26 million recorded as payable to shareholders, less deductions for tax and late payment. The Ports Authority has already paid a value added tax liability of $3.9 million to the Inland Revenue Department and will settle a further $195,000 in late payment. Subtracting both from $26 million gives $21.905 million — the Sunday Times figure exactly.
Add the $7.85 million the project company itself held as distributable cash at the end of 2025, and the total comes to $29.755 million, which is the $29.8 million the Daily FT reports. Every published figure in the settlement ties to every other one.
Only a tenth of the announced investment was ever put in
The gap between the first and second rows of that table is the substance of the story. Against the $392 million announced in April 2023, the partners had contributed $37.1 million in cash by the end of 2025 — about 9.5%. The project was never built.
The contributions were $26 million from Fortune Centre Group Limited (FCGL), China Merchants Port’s wholly owned subsidiary, and $5.6 million each from Access Engineering and the Ports Authority. Those three figures sum to $37.2 million against the $37.1 million total reported; the Daily FT describes the total as approximate, and the difference is rounding.
A further derivation follows from the same figures. If $26 million of the $37.1 million sat with the Ports Authority and $7.85 million remained with the project company, roughly $3.3 million was consumed by the project company over its life. Neither filing states this figure or says what it was spent on.
Who loses what
Both sums will be shared in proportion to shareholdings — 70% to FCGL, 15% each to Access Engineering and the Ports Authority. On that split FCGL receives about $20.8 million and the other two about $4.5 million each.
So FCGL recovers about $5.2 million less than its $26 million contribution, and Access Engineering about $1.1 million less than its $5.6 million. The Ports Authority’s own 15% holding is subject to the same shortfall, while it is simultaneously the party making the $21.905 million payment.
The partners will now move to strike off or wind up the project company, sharing those costs in the same 70:15:15 ratio.
What Sri Lanka had granted
The Sunday Times sets out the terms the project carried, and they were substantial.
The hub was gazetted as a strategic development project in December 2023, granting 15-year exemptions on corporate income tax and on tax on dividends. Sri Lanka had also granted China Merchants Port 50-year sole and exclusive rights to run port-related logistics in the Port of Colombo — barring the Ports Authority from granting any third party the right to carry out port-related logistics or warehousing services there at a rate lower than the royalty fees payable by the project company.
The Sunday Times adds a finding of its own: despite the announcement that the project will not proceed, it found no evidence on the Department of Government Printing’s website that the gazette had been revoked.
The project company was incorporated in the British Virgin Islands, and the building was to be five storeys.
The stated reason
China Merchants Port said it had reassessed the project “in view of changes in external circumstances, including adjustments to the SACLH Project’s implementation environment and timetable as well as the respective commercial considerations of the parties,” concluding that terminating it would be in the best interests of the parties. The wording is identical in both accounts, both quoting the Hong Kong filing.
The company’s board, including its independent non-executive directors, said the settlement terms were normal commercial terms, fair and reasonable, and in the interests of shareholders as a whole.
A disclosure point worth noting
Under Hong Kong’s Listing Rules the Ports Authority counts as a connected person of China Merchants Port at the subsidiary level. The reason is a separate shareholding: the Ports Authority holds 15% of Colombo International Container Terminals, which operates the Port of Colombo’s South Terminal and in which China Merchants Port holds the remaining 85%.
The state landlord of the Port of Colombo is therefore a minority partner of the Chinese operator in the port’s South Terminal, and was a minority partner in the abandoned hub — which is why the settlement required disclosure as a connected transaction in Hong Kong rather than being an ordinary commercial unwinding.
Not reported
Neither account says what happens to the land. The site was to sit in the centre of the Port of Colombo, and nothing published here states whether it will be re-tendered, retained by the Ports Authority, or assigned to another use.
Neither says what the “adjustments to the implementation environment and timetable” actually were, which is the one phrase standing in for the entire cause of the collapse. Nothing explains why the $26 million came to carry a tax and late-payment liability of roughly $4.1 million, or what the late payment was.
There is no comment from the Ports Authority, the Ministry of Ports, Access Engineering or the Treasury on the Sri Lankan side, and no statement on whether the $21.905 million has been budgeted. Nothing says when within the 30 days the payment falls due, or when the settlement agreement was signed — the Daily FT places the announcement “last week” and the Sunday Times “this week”, both consistent with the week ending 18 October, but neither gives a date.
The $392 million figure is from April 2023 and is the announced project value, not a current one. It is reported here as the scale originally claimed for the project, not as money lost.