Sri Lanka has signed a 35 year build-operate-transfer deal with a joint venture between a Chinese state-run firm (which owns 55%) and a local partner.

The deal was signed during President Mahinda Rajapaksa’s visit to China last week.

See LBO’s report here, and China Daily's here.

Colombo International Container Terminal (CICT) is a venture between China Merchants Holdings International, the Hong Kong listed Chinese state-run firm, and local firm Aitken Spence (which owns 30%). The Sri Lanka Ports Authority (SLPA) owns 15%.

“The project will further anchor the Port of Colombo’s position as a trans-shipment hub in South Asia," CMHI says.

CMHI is the Hong Kong subsidiary of China Merchants Group Ltd, one of China's largest state-owned conglomerates.

Meanwhile, Sri Lanka is also offering tariff concessions to shippers and liners willing to divert their cargo from Colombo Port to the newly built Hambantota port.

See The Island’s report here.

According to SLPA Chairman Priyath Bandu Wickrama, "Colombo is too congested and vessels have to anchor several days before entering the harbour, and this is a significant cost to shipping lines, so many are willing to call on Hambantota instead.”

It is not clear why concessions have to be offered in this case.

On a related note, Sri Lanka is considering ordering vehicle importers to use the Hambantota port instead of Colombo’s. This is despite the Hambantota port having none of the facilities that Colombo has for processing vehicle imports.

See the Sunday Times’ report here.

According to industry experts, 60% of imported vehicles are registered and used in Colombo and just 10% in the South, where Hambantota is located.

The cost of delivering the imported cars from Hambantota to Colombo is presumably to be borne by the importers. But the move will produce business for Hambantota.