The long wait for the signing of the crucial Build, Operate and Transfer (BOT) agreement on the Colombo South Container Terminal (CST) took place on Friday in Shenzhen, on the sidelines of President Mahinda Rajapaksa’s state visit to China.
The deal was signed by China Merchant Harbour International (CMHI), Aitken Spence and Company Ltd., (the consortium) and Sri Lanka Ports Authority.
The ceremony took place at Shekou’s Nanhai Hotel with signatories being CMHI Managing Director Hu Jianhua, Aitken Spence Deputy Chairman and Managing Director Rajan Brito, SLPA Chairman Dr. Priyath Bandu Wickrama and Managing Director Capt. Nihal Keppetipola.
Witnessing the Agreement signing were Deputy Director of Asian Affairs of Chinese Foreign Ministry Sun Wei Dong, Chinese Ambassador Extraordinary and Plenipotentiary of Sri Lanka Yang Xiu Ping, Sri Lankan Ambassador to China Ranjith Uyangoda, and other guests from China Merchants Group, CMHI, Aitken Spence Plc., Sri Lanka Port Authority, China Development Bank, China Export & Credit Insurance Corporation, China Harbour Engineering Company Ltd., etc.
The breakthrough signing was also discussed when China Merchant Group Chairman Dr. Fu Yuning met with President Mahinda Rajapaksa on the same day when the latter attended the opening ceremony of the 26th Universiade Shenzhen 2011.
The joint venture floated for the project is Colombo International Container Terminal (CICT), the operating company, with CMHI holding 55% stake, Aitken Spence Plc 30% and SLPA, 15%.
The total investment in the project is expected to exceed US$ 500 million and is Sri Lanka’s single largest private-sector foreign investment project.
Under the BOT Agreement, CMHI is granted the right to manage and operate the project for a term of 35 years. The terminal comprises a total quay length of 1,200 m and a depo land area of 58 hectares, with water depth of -18m. The project is expected to take two phases, with Phase I to be ready for operation by early 2013.
CMHI said the signing of this agreement also symbolises the birth in Sri Lanka of terminals that are capable of handling the world’s largest container vessels. Upon completion of CST, the project will have a handling capacity of2.4 million TEUs, thus further anchoring the Port of Colombo’s position as a trans-shipment hub in South Asia.
Subsequent to the BOT Agreement signing ceremony, representatives and officials from the Sri Lankan partners visited Shenzhen Shekou Container Terminal and Qianhaiwan Bonded Port Zone. The Bonded Port Zone, which is invested in and managed by CMG, has rapidly expanded since the Chinese Customs endorsed its zoning two years ago and has now become one of China’s Zones with the best economic results.
Dr. Fu, when meeting President of Sri Lanka, indicated, “at this juncture when the 26th Universiade Shenzhen 2011 is soon to open, receiving the visit by President Rajapaksa in Shenzhen carries particular momentous significance: because the CST project - CMG’s largest investment project overseas – is officially signed.
During the meeting, President Rajapaksa had said, “it was a great honour to be invited by the Chinese government to the opening of Universiade Shenzhen 2011. It was even more delightful to learn that, on the same day, the signing of the CST project was successfully concluded by the 3 joint-venture parties. Sri Lanka’s economy is currently at an important turning point and it is our country’s strategy to enhance our ports-related economy. We are deeply impressed by CMG’s achievements in its modern port and related businesses particularly those at Western Shenzhen Port. I have full confidence in the CST project that is to be invested in and managed by CMG and would like to wish the project every success.”
China Merchants Holdings (International) Limited is the listed flagship company of China Merchants Group. It is also a Hang Seng Index constituent stock on the Hong Kong Stock Exchange. It is mainly engaged in ports investment and operations, and related businesses. Terminals that the company has invested in or now manages spread over hub locations in Hong Kong, Shenzhen, Ningbo, Shanghai, Qingdao, Tianjin, Xiamen Bay and Zhanjiang. Container throughput handled by CMHI’s ports in 2010 totaled 52.28 million teu, which ranks CMHI, as an independent port operator, at the top in China and the fourth in the world.
CMHI began to invest in overseas ports since 2008. In 2010, a joint-venture it formed with China-Africa Development Fund has successfully acquired a 47.5% stake in Tin Can Container Terminal at Lagos of Nigeria. In September 2010, the CMHI-Aitken Spence consortium formed to submit an international bid for the CST development project successfully won a letter of intent from the Sri Lankan Government for the 35-year BOT concession.