A state partnership would fundamentally alter the operating structure of two key Panama Canal ports and could trigger significant losses for Hong Kong billionaire Li Ka-shing’s CK Hutchison Holdings, which was facing mounting hurdles over a US$23 billion asset sale, experts said.

The Hong Kong-based conglomerate is in the grip of a legal and political firestorm in the Central American nation which threatens its control over the two politically sensitive ports at either end of the strategic waterway.

Escalating the crisis, Panama’s president, Jose Raul Mulino, last week floated the idea of turning the ports’ operation into a public-private ownership if a Supreme Court challenge to the company’s concession was successful.

The Panamanian comptroller general’s office, an independent financial watchdog, is challenging the 25-year concession that was renewed in 2021 in court, arguing it is “unconstitutional”.

The dispute is unfolding amid a broader geopolitical struggle between Beijing and Washington, with the controversial ports deal caught in the crossfire of the long-running US-China trade war.

Mulino’s idea emerged days after CK Hutchison revealed that it planned to bring in a key strategic investor from mainland China as a significant member of the BlackRock-led consortium seeking to buy its global port assets.