Port City agreement extended for six months

Friday, 18 September 2015 00:00 - - {{hitsCtrl.values.hits}}

Cabinet yesterday decided to extend the agreement for the controversial $1.4 billion Colombo Port City project for a period of six months.

The period of the agreement signed between the Government of Sri Lanka and the relevant project company on 16 Seotember 2014 expired on 15 September 2015, Cabinet Spokesman Rajitha Senaratne said.

“The proposal made by Ports and Shipping Minister Arjuna Ranatunga to extend the above agreement for a further six months from 15 September 2015 was approved by the Cabinet of Ministers,” a Cabinet paper noted. But Senaratne was unclear on whether the company would be allowed to restart construction of the project, which was suspended in March 2015.

Multinational China Communications Construction Company (CCCC) subsidiary China Harbour Engineering Company is creating the new island off Colombo’s harbour, which was started during former President Mahinda Rajapaksa’s decade in power.

Earlier this year Prime Minister Ranil Wickremesinghe appointed a committee to look into the project, which had submitted a report to the country’s powerful Cabinet of Ministers outlining that relevant approvals had not been met and ordering work on the project be suspended.

As a result of this suspension, CCCC released a statement insisting it was experiencing an initial direct loss for the company of over $ 380,000 per day. The company subsequently appealed to the Government to allow a 50m breakwater to be built as a protective barrier to prevent erosion of the partially completed island from erosion.

Known to be the single largest investment project in Sri Lanka, the Port City includes Sri Lanka’s first 100-storey skyscraper under Phase II of its work. This phase would include the construction of hotels, shopping malls and a golf course.

The site is on 233 hectares of reclaimed land along the iconic coastline of Colombo. Under the proposed deal, 108 hectares would be given to the Chinese firm, including 20 hectares on an outright basis and the rest on a 99-year lease.

Outright ownership of land by foreign parties is illegal according to Sri Lankan law and this point of the contract has attracted much criticism.

Since the end of a three-decade war in 2009 China emerged as Sri Lanka’s largest loan provider with an estimated $ 5 billion worth of projects signed. These include a $ 360 million port and international airport in the southern part of the country, a $ 1.2 billion dollar coal power plant and many highway and railway projects.

Chinese President Xi Jingping ceremoniously flagged off the Port City project when he visited the island last September when both countries inked over 20 agreements.