The International Finance Corporation (IFC), part of the World Bank Group, in collaboration with HSBC, is set to invest up to $40 million in South Asia Gateway Terminals (Pvt) Ltd. (SAGT). This funding aims to enhance and decarbonize operations at the Port of Colombo, which is essential to Sri Lanka’s maritime trade. The investment will bolster the port’s competitiveness, resilience, and sustainability, solidifying its status as the premier transshipment hub in South Asia and enhancing Sri Lanka’s connectivity to international markets.
This financing arrangement includes a sustainability-linked loan of up to $20 million from IFC, which incorporates approximately $8.57 million sourced through IFC’s Managed Co-Lending Portfolio Program (MCPP), alongside a corresponding green loan of up to $20 million from HSBC. The initiative illustrates how blended private capital can effectively support critical infrastructure on a large scale. The funds will be utilized to purchase advanced twin-lift ship-to-shore cranes, which are expected to boost productivity, enhance operational reliability, and reduce energy consumption, thereby enabling SAGT to cater to increasing trade demands with improved efficiency for global shipping lines.
This transaction represents IFC’s inaugural sustainability-linked financing initiative for an infrastructure entity in Sri Lanka and marks its re-engagement with the country’s port sector after a hiatus of two decades. It builds upon a long-standing partnership with SAGT, which began in 1999 when IFC helped finance Sri Lanka’s first public-private partnership container terminal. Since that time, SAGT has played a pivotal role in establishing the Port of Colombo as a leading transshipment center in the region, setting standards for operational excellence, innovation, and private sector involvement in Sri Lanka’s maritime industry.
The investment is projected to enhance quay-side productivity by a minimum of 11%, increasing the port’s capability to manage both transshipment and domestic container traffic. Additionally, it is anticipated to reduce SAGT’s carbon emissions, generate employment opportunities, and promote greater inclusion of women in an industry where their presence is currently limited.
Sri Lanka’s geographical location at the intersection of some of the world’s busiest shipping lanes, with nearly half of global container traffic transiting nearby, positions the Port of Colombo as a crucial asset. This strategic advantage reinforces the country’s role as a regional logistics hub, supporting an industry that contributes approximately 2.5% to the nation’s GDP.
Steen Knudsen, CEO of SAGT, stated, “At SAGT, we are dedicated to transforming Sri Lanka’s maritime sector through ongoing investments in world-class infrastructure that boosts productivity and operational excellence. This milestone, being IFC’s first sustainability-linked financing for infrastructure in Sri Lanka, highlights our commitment to fostering sustainable growth and establishing new industry benchmarks.”
Gevorg Sargsyan, the Country Manager for the World Bank Group in Sri Lanka and the Maldives, commented, “When trade flourishes, economies thrive. This investment, as IFC’s first sustainability-linked financing for infrastructure in the country, exemplifies how innovative financial solutions can modernize vital economic assets, promote decarbonization, and facilitate long-term sustainable growth.”
Amesh Dissanayake, Director of Corporate and Institutional Banking at HSBC Sri Lanka, remarked, “Our global reach and expertise enable us to play a key role in financing transitions in critical sectors. Given the maritime sector’s strategic importance to Sri Lanka, HSBC is dedicated to supporting its modernization and transition towards a lower-carbon future. Our parallel green loan will facilitate SAGT in upgrading essential port infrastructure, enhancing productivity and reliability while minimizing energy use and CO₂ emissions. This demonstrates how sustainable finance can achieve tangible, measurable results.”
This investment aligns with the World Bank Group’s Country Partnership Framework for Sri Lanka and supports the government’s objectives to enhance the country’s position as a regional logistics and transshipment hub while deepening its integration into global trade networks.
