Japan’s Onomichi Dockyard Company has announced its decision to divest its 51% ownership stake in Colombo Dockyard PLC, Sri Lanka’s prominent international shipbuilding and repair company. The announcement comes as Colombo Dockyard marks its 50th anniversary, grappling with mounting financial difficulties and intensifying global competition in the maritime sector.
Located strategically in Sri Lanka, Colombo Dockyard plays a critical role in the country’s economy by generating export revenue and providing significant employment opportunities. Despite Sri Lanka’s ongoing financial crisis, the shipyard earned approximately $110 million in export revenue in 2023—a 36% increase compared to 2022. The company undertakes shipbuilding and repair projects for nations such as India, Norway, and France, cementing its position in the international market.
Founded in the 1970s as a government initiative, Colombo Dockyard commenced operations in 1974 with a focus on harbor craft and smaller vessels. Over the decades, it has expanded its capabilities, now accommodating vessels of up to 125,000 deadweight tons (dwt) and engaging in both newbuild and repair services.
In recent years, the shipyard has emphasized its expanded repair work and involvement in advanced projects, including the construction of cable layers, hybrid bulkers, very large gas carriers (VLGCs), dredgers, and offshore vessels. However, the company faces fierce regional competition, particularly as India accelerates the growth of its shipbuilding industry.
The financial challenges for Colombo Dockyard have worsened in 2024, with revenues declining by one-third compared to the previous year. 2023 marked the company’s worst financial performance, with losses amounting to nearly $38 million. The accumulated retained loss now stands at approximately $26 million. In light of these difficulties, the company has notified its key creditors of Onomichi’s intent to divest its shares.
Onomichi Dockyard, a shipbuilding company with roots dating back to the 1940s, acquired its 51% stake in Colombo Dockyard in 1993. This acquisition was part of a privatization drive initiated by Sri Lanka’s then Prime Minister. The deal granted Onomichi management control of the shipyard. Following its decision to divest, Onomichi’s board representatives have also tendered their resignation.
Colombo Dockyard’s board has assured shareholders that discussions are underway to secure a new strategic partner. While initial expressions of interest from potential investors have been received, no definitive terms have been established. The company has also received assurances from Onomichi of its cooperation in facilitating a smooth transition to a new strategic buyer, ensuring the continuity of operations.
