"The total investment in the project is expected to exceed $500 million and is Sri Lanka's single largest private-sector foreign investment project," the Ministry of Foreign Affairs said in a statement.
China International Container Terminal (CICT), a joint venture operating company, has been set up between China Merchants Holdings International, Sri Lankan conglomerate Aitken Spence and Sri Lanka Ports Authority (SLPA) to design, build and manage the Colombo south terminal.
China Merchant holds 55 percent of CICT, while Aitken Spence and SLPA hold 30 percent and 15 percent respectively.
The joint venture will build the first of three planned terminals in the Colombo port. Each is expected to add the capacity to handle an additional 2.5 million Twenty-Foot Equivalent Units (TEU). The port now handles 4.5 million TEU.
"The terminal comprises a total quay length of 1,200 m and a depot land area of 58 hectares, with water depth of 18 m. The project is expected to take two phases, with phase one to be ready for operation by early 2013," the statement said.
Sri Lankan President Mahinda Rajapaksa signed the deal during a state visit to China.
The Chinese firm was awarded the contract in August last year.
China Merchants is a holding company for enterprises that develop transport and infrastructure businesses. Its main business unit operates ports in China.
Sri Lanka relies increasingly on China and Chinese companies for the financing and expertise needed for more than $6 billion worth of infrastructure investments it has undertaken since the end of a three-decade civil war in May 2009. (Reuters)
