On October 15, 2026, China Merchants Port Holdings (CMPort) told the Hong Kong Stock Exchange that it had pulled out of the South Asia Commercial and Logistics Hub (SACLH) project at Colombo Port. The Sri Lanka Ports Authority confirmed the exit on October 19. For a country still rebuilding investor confidence after its debt crisis, the news landed hard, and social media quickly filled with posts saying a Chinese investor had walked away over poor government administration and been handed US$22 million in compensation on the way out.
We checked those claims against official documents, government statements, and the Chinese side’s own announcements. Here are the posts that spread them.
Social Media Posts:
A card shared by one Facebook page read: “A Chinese investor leaves Sri Lanka, withdrawing a US$392 million investment. The reason is Anura’s government’s poor administration. US$22 million is also being paid to the investor as compensation.” Another post, stamped “CANCELED” and carrying the words “compensation amount is US$21.9 million”, claimed that the Sri Lanka Ports Authority had to pay compensation to the investors.
Facebook 1 | Archived Link | Facebook 2
Claim Under Review: Because of poor government administration, a Chinese investor withdrew a US$392 million investment, and Sri Lanka is paying the investor US$22 million in compensation.
Fact-Check:
CMPort’s exit and the termination of the agreements are officially confirmed
According to the announcement China Merchants Port Holdings filed with the Hong Kong Stock Exchange on October 15, 2026, the Shareholders’ Agreement, the Build-Operate-Transfer (BOT) Agreement and the Land Lease Agreement were all terminated before they were due to expire. The first page of the announcement is shown below. The full announcement is here.
The announcement gave the reasons for ending the project as changes in external conditions, changes in the project’s implementation environment and timeline, and the commercial considerations of the parties. It said that after discussions with the local government, the parties agreed to an orderly termination based on the principles of “friendly negotiation and neutrality”. The announcement made no mention of compensation, penalties, or damages.
The US$21.9 million is not compensation to the Chinese firm but a refund of investment to all three shareholders
According to the project company’s audited financial statements as of December 31, 2025, the shareholders invested US$37.14 million. Of this, US$26 million came from CMPort’s subsidiary Fortune Centre Group Limited (FCGL), and US$5.57 million each came from the Sri Lanka Ports Authority and Access Engineering PLC.
Under the settlement, the US$3.9 million in VAT that the Ports Authority had already paid to the Inland Revenue Department and US$195,000 in late payment liabilities were deducted from the US$26 million invested by the shareholders. The remaining US$21.905 million must be paid within 30 days. This money is paid not to the Chinese company but to the project company, SACL. It will be added to the US$7.85 million the company still holds in cash and shared out according to each shareholder’s stake.
Below is a breakdown of the amounts returned against the investments for each of the shareholders.
| Shareholder | Stake | Investment (US$) | Amount returned (US$) |
| FCGL (CMPort) | 70% | 26.00 million | About 20.83 million |
| Sri Lanka Ports Authority | 15% | 5.57 million | About 4.46 million |
| Access Engineering PLC | 15% | 5.57 million | About 4.46 million |
| Total | 100% | 37.14 million | About 29.8 million |
Source: CMPort Hong Kong announcement. Total: 21.905 + 7.85.
This means no shareholder gets its full investment back. CMPort’s subsidiary receives about US$5.2 million less than it put in, while Access Engineering was reported to recover about Rs. 1.45 billion of its Rs. 1.76 billion investment, a loss of around Rs. 310 million.
When we contacted the Sri Lanka Ports Authority, its Head of Communications and Public Relations, U.L.D.C. Silva, said that CMPort’s withdrawal from the project was true, but the claim that US$22 million was being paid as compensation was false. He said the Chinese company had earlier paid US$26 million as lease rent, and that this amount was being refunded after deducting taxes and arrears. The Hong Kong announcement, however, describes that money as an investment made by the shareholders, and it does not explain why the Ports Authority, rather than the project company, is refunding it.
Under the settlement, the Ports Authority bears US$26 million including VAT and late charges, while getting back about US$4.46 million as a shareholder (our calculation). If that US$26 million was lease rent the Ports Authority had received earlier, the payment is a refund of money already received rather than a new loss. This condition has not yet been officially confirmed.
US$392 million was the planned total project cost, not money spent or taken out of the country
According to CMPort’s April 21, 2023, announcement to the Hong Kong Stock Exchange, the total project cost was estimated at US$392 million, and the project company’s share capital was planned at US$84 million. By the end of 2025, however, only US$37.14 million had actually been invested.
The Ports Authority’s October 19, 2026, announcement put the project investment at US$280 million. According to a December 2023 gazette, that was the cost of Phase 1, to be financed at a ratio of 70% debt to 30% equity. The claim that “US$392 million was taken out of the country” is therefore wrong.
The project began with a Cabinet decision in January 2023 and was signed in April 2023
On January 23, 2023, the Cabinet approved a US$150 million Phase 1 proposal by Colombo International Container Terminals (CICT) to develop the Battenberg and Bloemendhal areas of Colombo South Port as a public-private partnership, on the recommendation of a Cabinet-appointed negotiating committee (here). In other words, the project started by negotiating a proposal that had been submitted, not through an open tender.
In April 2023, the Sri Lanka Ports Authority, CMPort and Access Engineering signed the agreements. They gave the project company exclusive operating rights for a 50-year BOT period, on condition that it paid an initial royalty of US$14 million to the Ports Authority (here). The Ports Authority was also barred from allowing any other party to provide logistics or warehousing services at Colombo Port at rates lower than the royalty paid by the project company.
A gazette dated December 22, 2023, declared the project a Strategic Development Project and granted it a 15-year exemption from corporate income tax and dividend tax. Port trade unions had protested as early as May 2023 against prime port land being handed over without a tender (here).
Tax concessions, land issues, and administrative delays kept the project stalled for about three years
The project was due to start in the second half of 2023, but it had still not begun by March 2024 because the concession approvals were incomplete (here). In January 2025, the then Ports Authority Chairman said that because Strategic Development Project concessions had been withdrawn following the debt crisis and the IMF programme, the project had to apply for the general incentives offered by the Board of Investment (BOI) instead (here).
Regulations issued on February 8, 2026, under the Strategic Development Projects (Amendment) Act No. 26 of 2025 later capped the corporate income tax holiday for such projects at five to 10 years (here). The 15-year concession granted to this project in 2023 went beyond that new limit.
The media secretary to the Minister of Ports and Civil Aviation told us that building a logistics hub inside the space-constrained Colombo Port could have worsened congestion, so attempts were made to move it to another site close to the port. Finding such a large plot in the city proved difficult, and this also delayed the project.
A report published on May 17, 2026, quoted the BOI Director General and the Ports Authority Chairman as confirming that the project had been cancelled (here). The October announcement formally completed that decision.
The government says the project could not go ahead under the existing agreement
Leader of the House and Minister Bimal Rathnayake told Parliament on October 21, 2026, that one reason for the government’s objection was the agreement to hand over a 10-acre plot between the East and West container terminals. He said the government supported the investment but could not proceed under the existing agreement because proper procedures had not been followed, and that going ahead under questionable agreements could discourage other investors (here).
The government itself therefore accepts that its own stance was one factor in ending the project, although the project had already stalled in 2023 and 2024 under the previous government. Opposition Leader Sajith Premadasa expressed concern about foreign investors leaving the country (here). With Adani Green also having pulled out of a renewable energy project in Sri Lanka in February 2025, investor confidence remains a genuine subject of debate.
CMPort’s Hong Kong announcement is the Chinese side’s only official statement
As of October 27, 2026, the website of the Chinese Embassy in Sri Lanka carried no statement about the withdrawal (here), and we found no statement from the Chinese Foreign Ministry either. The Chinese-language version of the CMPort announcement also gave only “changes in the external environment” and commercial considerations as reasons (here). Chinese-language media reported only the points in that announcement (here).
CMPort said it ended the project after consulting the local government and in the interests of all parties, and its board described the settlement terms as normal commercial terms. The deal is small relative to CMPort’s size, with all the relevant ratios below 1%, and the announcement was issued because earlier agreements had been ended ahead of schedule (here). In 2023, the company had said it expected the project to increase its share of the South Asian port market and its regional influence (here). CMPort still owns 85% of the CICT terminal in Colombo and manages Hambantota Port.
No evidence shows geopolitical pressure forced the exit
Some Indian media headlined the withdrawal as the result of “external pressures”, but those reports relied on the views of unnamed observers (here). A director of a Sri Lankan organisation that promotes China’s Belt and Road Initiative pointed to three factors: US scrutiny, the reduction of tax concessions under the IMF programme, and local administrative delays (here).
The land’s location next to the West Container Terminal, led by India’s Adani Group, could have raised regional sensitivities. However, we found no document or official statement showing that India or the US opposed the project, and the CMPort announcement does not name any country.
A new logistics hub is to be tendered under a public-private partnership model
The Sri Lanka Ports Authority’s announcement of October 19, 2026, said that a new logistics hub at Colombo Port will be developed under a public-private partnership (PPP) model through competitive bidding, subject to the relevant approvals.
This was also reported at the time. No new investor or new timeline has been announced yet.
Limits of the available evidence
CMPort does not explain exactly what it means by “changes in external conditions”, and the announcement does not give the date on which the settlement was signed. There is still no official clarification on the terms under which US$26 million was paid to the Ports Authority, how the Ports Authority will fund the settlement, or whether the 2023 gazette will be revoked. We will update this article as new information comes in.
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Conclusion:
China Merchants Port Holdings did withdraw from the SACLH project at Colombo Port. But the US$21.905 million is not compensation paid to the Chinese company. It is a refund of investment paid to the project company and shared among all three shareholders according to their stakes, and none of them recovers its full investment. The US$392 million was the planned project cost, not money taken out of the country, and CMPort’s Hong Kong announcement makes no mention of compensation or penalties.
Launched in 2023 without a tender, the project stalled for about three years over tax concessions, land and administrative problems, and the current government also decided not to proceed under the existing agreement. There is no evidence that the exit was caused solely by “poor administration” or by pressure from a foreign country, and CMPort’s Hong Kong announcement remains the Chinese side’s only official statement. These findings are based on CMPort’s 2023 and 2026 Hong Kong Stock Exchange announcements, the Cabinet decision, the gazettes, the Ports Authority’s announcement, and the minister’s statement in Parliament.
