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Tue, 21 April 2015 18:45:15
Sri Lanka group may pull out of China led terminal firm
11 Jan, 2012 08:36:29
Jan 11, 2012 (LBO) - Sri Lanka's Aitken Spence, may be forced to pullout from a container terminal project in Colombo after financing from a Chinese bank fell through, requiring additional financing from consortium partners, sources said.
Colombo International Container Terminals (CICT) began construction of a 600 million US dollar Colombo's expanded South harbhour last month.

The firm is 55 percent owned by China Merchant Holdings International, a state run Chinese firm, 30 percent by private listed Aitken Spence and 15 percent by the Sri Lanka Ports Authority, a Sri Lanka state-run firm.

The firm was negotiating a 350 million US dollars with China Development Bank (CDB) to build the terminal with its project cost escalating to 600 million dollars from an original plan of 450 million dollars, a source familiar with the matter said.

But the CDB loan had fallen through after it insisted on a Sri Lanka government guarantee for its loan. The project which was to be on a 35 year build-operate-transfer concession had specified from its initial stages that there would be no state guarantees.

The main Chinese partner had said it was willing to pump in 350 million dollars to the project provided other partners also chip in. Aitken Spence was originally expected to inject 45 million US dollars as equity.

The new commitment would have been a further 130 million US dollars, which was beyond the capacity of the firm, which may force it to pull out of the consortium, source said.

In that event the terminal would be 85 percent owned by China Merchant Holdings. SLPA is expected to put in its share.

The terminal is being built by China Harbhour Engineering Corporation, which won the bid in a race with another Chinese firm.

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4. saman Jan 12
Aitken spence management is to blame, if they did a rights issue, this would have not lost this.. harry was greedy...

GOSL should recall tenders again. get indians into the bid process

3. Rabok Jan 11
This is clearly a manupulation of Chinese to dominate their presence in one of the most stratergic harbors in the region - How come the cost start increasing after the award of contract to CH - only due to exchange rate fluctuvations????? - why the hell GOSL should provide gurrantees to CDB - is'nt it BOT - this another ball game of Chinese -- 70% loan component + 30% equity component will be spent entirely on Chinese dredging/reclamation, chinese equipments , chinese labour , Chinese management --- all chinese chinese - and money make a round trip from chinese Gov. back to chinese Gov.with the added equity contributions from local equity holders - it looks like the local equity holders are paying interest on 70% CDB loan - and earn much lesser return on investment - end of 35 years SLPA wil receive a rotten harbor - big mouth Mr W will be happy to announce that SLPA is currently handling 2.4 mil TEU per annum - and Colombo Harbor is the HUB and and ... - but will not comment that poor SLPA is earning only pea nuts + rotten harbor - Mr MR do not allow chinese to bully our SL companies this way - chip in and protect
2. akram Jan 11
This is not in the interest of sri Lanka.. local banks and GOSL should chip into this and make sure SL retains the benefits. This is a chinese squeeze and India will also stand to loose.
1. W. A Jayatilaka Jan 11
You must understand the point. Technically Chienease people do not want Aitken Spence on their board, So that they arrange the bank to act like this knowing that A/S Can not afford to meet the required share resulting Chinese firm and SL governmet only on board. The USD 350 million loan would have in principly agreed by Chinease bank. Other wise there will not be a way to prove the project financing to SL governmet. On the other hand Chinease bank would have noticed that this project will not have SL government guarantee. Then why they wait till last moment? This is all international politics.