China Development Bank provides $805 million loan for Colombo Port City Project Phase 1 (Linked to Project ID #55528)

On September 16, 2014, China Communications Construction (CCC) signed the Colombo Port City Franchise Agreement with the Sri Lanka Ports Authority (SLPA), outlining an investment for the Colombo Port City Project (now known as the Colombo International Financial City). On this same day, China Development Bank signed an 805 million USD commercial loan financing agreement with CCC for this project (see attached 2014 article CDB). The 805 million USD loan from China Development Bank for the Colombo Port City Project is captured in this project. For details regarding the equity investment from CCC, see linked project ID #55528. The Colombo Port City (CPC) Project was initially conceived as a public sector project that would be undertaken by the Sri Lanka Port Authority (SLPA). Consequently, the SLPA commissioned at its own cost an “initial technical feasibility study” in April 2010 for the reclamation of land south of the new breakwater. Around June 2010, an environmental impact assessment study was commissioned by SLPA also at its own cost through the University of Moratuwa (UoM) for a reclamation area of 200 hectares. In October 2010, Sri Lanka’s Urban Development Authority (UDA) completed a master plan study based on the initial technical feasibility study and submitted a project proposal to the SLPA for consideration. In April 2011, based on an unsolicited concept proposal submitted by China Communications & Construction Company (CCCC), the parent company of CHEC Port City Colombo (PVT) Ltd., the Government of Sri Lanka (GOSL) decided to not to commit public funds to construct the CPC Project and proceeded to negotiate with CCCC to implement the project entirely as a foreign direct investment, with no financial guarantees by the GOSL on the investment. After a 2.5 year period of negotiation with a Standing Cabinet Appointed Review Committee (SCARC) and a Technical Evaluation Committee (TEC) represented by 16 GOSL organizations, a project agreement was entered into between CHEC Port City Colombo (PVT) Ltd., and the Secretary to the Ministry of Highways, Ports and Shipping (acting for and on behalf of the GOSL) on September 16, 2014. CHEC Port City Colombo (Pvt.) Ltd., is a project company (special purpose vehicle) and wholly owned subsidiary of China Harbour Engineering Company (CHEC), which operates under its parent company China Communications Construction Company Limited (CCCC). The project agreement was signed, and the project’s construction works were ceremonially inaugurated on the same day (September 16, 2014) in the presence of the President of the Peoples’ Republic of China and the President of the Democratic Socialist Republic of Sri Lanka, during the Chinese President’s State visit to Sri Lanka. Colombo Port City (CPC) Project is being implemented on public-private partnership (PPP) project and BOOT basis and it is being financed according to a 70:30 debt-to-equity ratio. The $1.396 billion project is divided into two phases: the first phase investment will cost $1.150 billion and the second phase investment will cost $246 million. The first phase was started on September 16, 2014. Its originally planned completion date was April 2020, but construction was suspended due to the change of government in March 2015. Construction then resumed in August 2016. The new expected completion date is April 2024. On May 12, 2017, China Development Bank provided a $805 million loan to CHEC Port City Colombo (Pvt.) Ltd. for the first phase of the project, or roughly 70% of the total cost of the first phase project of the project. The loan carries a 10-year maturity and a 3-year grace period. No sovereign guarantee was provided for the loan. China Harbour Engineering Company (CHEC) is the EPC contractor responsible for project implementation.

Additional details

This project is also known as the Colombo International Financial City (CIFC) project. The Chinese project title is 斯里兰卡科伦坡港口城项目. The second phase of the project is also expected to be financed with a debt-to-equity ratio of 70:30. This project is located on reclaimed land adjacent to the Galle Face Green in the city of Colombo. It is between the southern edge of the new Colombo South Port and the Fort Lighthouse. Its locational coordinates are 06°56′00″N 79°50′00″E.

Number of official sources

22

Number of unofficial sources

41