Sri Lanka entered into a US$ 500 million deal with one of the largest port operators in the Asian region, the Hong Kong-based China Merchants Holdings International (CMHI) to build and operate a container port in Colombo.

The Company has signed a deal to invest more than US$500 million, Sri Lanka's largest single investment project, to build and operate a container port in Colombo, the External Affairs Ministry said.

The terminal comprises a total quay length of 1,200m and a depot land area of 58 hectares with water depth of 18m.

The Colombo South Container terminal (CST) is CMG's largest investment project overseas and the port will have annual throughput of 2.4 million 20-foot equivalent units (TEU) after opening the first phase "CMGI said.

The Project is expected to take two phases, with Phase 1 to be ready for operation by early 2013. The entire facility is scheduled for completion within five years.

The Chinese conglomerate has a 55% share in the project. Aitken Spence will hold a 30% stake in the project, while the Sri Lankan port authority will hold the remaining 15% stake.

The Sri Lanka Ports Authority Chairman Dr. Priyath Bandu Wickrama and Chairman of China Merchants Group Dr. Fu Yuning were signatories to the agreement which took place in Shenzhen. Representing the two countries, Chinese Ambassador to Sri Lanka Mme. Yang Xiu Ping and Sri Lankan Ambassador to China Mr. Ranjith Uyangoda witnessed the signing of the agreement.

The signing ceremony was organized on the sidelines of the visit to China by President Mahinda Rajapaksa from 9th to 12 August.