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Plans to build a $1.4 billion port city in Colombo could be in jeopardy. The project led by Chinese company China Communications Construction is now in doubt as the new Sri Lankan government is currently reviewing the project.
Former Sri Lankan president Mahinda Rajapaksa, who played a key role in giving Chinese companies access to major projects, was replaced by Maithripala Sirisena in the recent general election, during which Sirisena had expressed his concern over the Chinese projects. Ranil Wickremesinghe, the new prime minister of Sri Lanka, has said he would cancel the port project and review all major infrastructure projects.
Construction of the port city is underway after China Merchant Holdings signed an agreement with Sri Lanka Ports Authority in September last year. The port city is Sri Lanka’s largest single foreign investment but there are concerns that China will gain ownership of one-third of the total 233 hectares of reclaimed land that the new port city will occupy.
Colombo Port City is being built alongside Colombo South Container Terminal, in which China Merchants Holdings has also invested and manages. This terminal was completed in April last year.
China Communication Construction and China Merchants Group are also working on Phase II of the development of the container terminal at Sri Lanka’s Hambantota Port, which is being constructed on a supply, operate, transfer (SOT) basis. Last year volumes of commercial cargo at Hambantota were well up, particularly in the ro-ro sector. The volume of cars handled at the port has in particular shot up, from 64,000 units in 2013 to 189,000 last year.
