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Friday Nov 15, 2024
Monday, 10 March 2014 00:00 - - {{hitsCtrl.values.hits}}
The project could be known as the largest-ever private, overseas financial investment project implemented via SLPA in Sri Lanka. The investment in its initial stage comes to US$ 1.34 billion. Most importantly, the project is not funded by the Government of Sri Lanka or the SLPA.
Accordingly, a land of 233 hectares is planned to reclaim beside the breakwater of the Colombo Port Expansion Project towards the Galle Face Green.
This would include a 3.25km long breakwater and a large internal artificial canal. The total land area will be supplied with electricity, consumable water, roads for transportation, sewerage systems and all other infrastructure at a level required for an international business centre.
Headquarters for shipping and logistics institutions and related enterprises, luxury hotels and apartment complexes, shopping malls, space for modern offices, leisure and recreational activities will also be developed and constructed.
Although some have stated that the project would include a Formula track that drives up to Gampaha, it is apparent that it includes only a general track exactly equals to the kind of a course available in Singapore that utilises the main road to hold such motor races. Therefore, during the construction of the roads, the project will consider the inclusion of primary components required to conduct such motor events. It is stressed therefore, that this by any means, is not a dedicated construction to hold Formula One events.
As per an unsolicited proposal forwarded by China Harbour Engineering Company Ltd. (CHEC), a partnership of the China Communication Construction Co. Ltd. (CCCC), which falls under Fortune 500 Companies of the world, has been granted permission to develop the Colombo Port City Project, including reclamation, breakwater construction, connected road network and supply of services, under the procedures adhered by the Government to implement such proposals. Accordingly, this proposal was primarily submitted for Standing Cabinet Appointed Review Committee (SCARC) through the Department of Public Finance for approval.
On instructions by the SCARC, Sri Lanka Ports Authority (SLPA) also entered into a Memorandum of Understanding (MOU) with CCCC and obtained the detail proposal which was expressed at the Technical Evaluation Committee (TEC) appointed by SLPA to evaluate the Project Proposal. The final approval has been granted thereafter, subjected to the agreement by the Attorney General.
Therefore, SLPA responsibly states that it is totally irresponsible for anyone to state that this is a hidden project implementation in Sri Lanka.
After 1977, and since then up to now, various Governments that were in power in Sri Lanka have granted approval to carry out such implementations following considerations to the project proposals expressed by similar institutions and enterprises, with the hope of retaining investors in the country. The World Trade Centre in Colombo, Hilton, Galadari and Taj Samudra hotel projects are only a few examples to such implementations.
The chart clearly depicts the grant of several lands situated in the centre of the city of Colombo for development projects from 1980 to 1984 under the 99-year lease basis. It also points out a clear view of the policy adhered regarding the cost of land after 1977. This project has also followed the same framework.
This project should construct a breakwater with a length of 3.25m. Although statements have been brought out upon adverse information indicating no proper or any study has been carried out in this regard, the preliminary studies that should be followed, namely mathematical and physical model tests, have been completed within laboratories of international standard and changes have also been included upon data presented following the tests.
These breakwaters become crucial due to the fact that the existence of everyone who lives and resides on these reclamations depend on the breakwaters constructed here. Therefore, the SLPA has extended its fullest concern on their constructions.
The developer agreed to obtain the service of URS Infrastructure & Environment UK – the consultancy company which conducted the consultation services of the Colombo Port Expansion Project, to supervise the breakwaters of the Colombo Port City Project are properly and accurately planned and their constructions are carried out according to accurate procedures is a further assurance granted towards the safety of the construction of breakwaters of this project. URS Infrastructure & Environment UK becomes the best institution in this regard due to its experience of offering consultation to a similar project since inception.
It is totally inaccurate to mention that the project has never undergone an environmental evaluation as well. The Environment Evaluation Certificate for the project was obtained in December 2011, following compilation of all environmental evaluation reports and fulfilling all activities therein, adhered to relevant procedures.
Several concerned personages had raised questions with regard to the reasons why the project was implemented via SLPA. This is a larger project that involves a land reclamation exposed to severe sea waves, which requires breakwater protection and looking after of the marine environment. The SLPA is the only institution in Sri Lanka which possesses experience and technical expertise to implement and carry out such activities.
It is further important to sustainably maintain the canal and artificial beach constructed here and SLPA is the only arm that possesses required machinery and trained manpower for this work. Therefore, SLPA itself implements the entire project.
Reports by many parties and persons of various issues pertaining to the investor company of the project were countered and answered by the company itself via media.
The total investment in this regard is invested by the relevant company with a greater concern over the project and 125 hectares of land area out of the total land area of 233 hectares will be owned by the Government of Sri Lanka, whilst the rest will be retained by the company to cover their costs of expenditure, where as only 20 hectares come under the company’s full ownership whilst the rest will be handed over under 99-year lease basis. The investor should hand over these lands to other investors under 99-year lease basis to sustain expenditure and earn revenue.
Accordingly, the investor, at the initial stage, owns only the seabed. The procedure in this regard, therefore, will be leasing the seabed. With additions of interest to the total project expenditure, the cost will be US$ 1,918 million. Divided by the land extent owned by the investor company, the investor should spend Rs. 5.8 million for a perch of seabed.
To receive the internal rate of return of the investment as at 16%, one hectare of land extent should be valued at US$ 24 million. The value is Rs. 7.8 million for a perch. Therefore, the minimum value of one perch here is Rs. 8 million. As the land extent is not exposed at the market at once, the market value of the lands will not be reduced.
Similar projects could be seen elsewhere in the world where investors have been granted with better benefits and conveniences. Instances are also apparent where investors have been offered with the total administration of such projects. However, in this project, the total administrative responsibility is vested upon SLPA, the Board of Investment and the Urban Development Authority.
Meanwhile, it is expected to earn investments worth US$ 20 billion via other investments within this land extent. It will also generate a large number of employment opportunities. SLPA will receive a large financial benefit by granting these land extents on long-term lease basis that will enable SLPA, in return, to pay back all the loans it has obtained and become the pioneer institute that strengthens the State financial status.
