China ups stake in Colombo South container terminal

January 23, 2012, 12:00 pm 

With Aitken Spence announcing its withdrawal from the consortium with China Merchant Holdings to design, build and operate a container terminal at the Colombo South Port, the Sri Lanka Ports Authority (SLPA) and Board of Investment (BOI) have granted it approval to sell its entire stake to its former Chinese partner. After the deal is finalised, China Merchant Holdings would increase its stake from 55 percent to 85 percent. SLPA would continue to hold its 15 percent stake in the country’s single largest private sector led project, estimated to cost over US$ 600 million.

"Colombo International Container Terminals Ltd (CICT) has received letters from the SLPA and BOI both dated January 20, 2012 granting the approval for China Merchant Holdings (International) Company Ltd to purchase the entire 30 percent sharholding of Aitken Spence PLC in CICT," Aitken Spence said in a letter yesterday (Jan. 23) signed by Company Secretary R. E. V. Casie Chetty.

"Hence, we are now finalising the formalities of the transfer and will keep you informed when the transaction is competed," the letter addressed to the Colombo Stock Exchange said.

The project was estimated at US$ 500 million but cost escalations and delays have pushed the cost up to almost US$ 600 million.

Aitken Spence had pulled out of the consortium after financing from the China Development Bank fell through. Differences between the management of the two firms did not help matters either, source said.

Earlier, SLPA Chairman Dr. Priyath Bandu Wickrama said the SLPA was keen to buy over Aitken Spence’s stake, but now it seems the SLPA has allowed the stake to go over to China Merchant Holdings.