Sri Lanka Ports Authority (SLPA) has signed an agreement with Adani Group and John Keells Holdings to develop the Western Container Terminal of the Port of Colombo (POC).

Valued at more than $700m, this build-operate-transfer (BOT) agreement is said to be the ‘largest’ foreign investment ever in Sri Lanka’s port sector.

The agreement will remain valid for 35 years.

Adani Group will become the first Indian port operator in Sri Lanka and have a 51% stake in the West Container International Terminal joint venture (JV).

John Keells and SLPA will respectively own 34% and 15% interests in the JV.

Through this investment, SLPA aims to bolster cooperation between regional economies and further improve POC’s global reputation as an international hub port.

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In March 2021, Sri Lanka’s Cabinet granted approval for the development of the terminal through a public-private partnership (PPP) in collaboration with SLPA and investors nominated by the Indian and Japanese governments.

As revealed by Adani Ports and Special Economic Zone (APSEZ) this August, the company plans to invest over $675.68m (Rs50bn) in what is said to be its second international project after Myanmar.

This recent development comes after Sri Lanka decided to withdraw the previous memorandum of understanding with India and Japan on the Eastern Container Terminal (ECT).

Signed in 2019, the memorandum of cooperation was in connection with the development of the ECT.

After commencing operations, the terminal is expected to increase POC’s capacity to three million TEU a year.

Nearly 45% of Colombo’s transhipment volumes start from or are destined to an APSEZ terminal in India.

Last month, APSEZ completed the acquisition of India’s Government of Andhra Pradesh’s (GoAP) 10.4% stake in Gangavaram Port in an $88.36m (Rs6.45bn) deal.

Both the APSEZ and GPL boards sanctioned the merger.

This transaction values GPL at $1.63 (Rs120) a share, with a fair value of APSEZ at $10.25 (Rs754.8) a share.