Sri Lanka’s port city project awaits new instructions

Apr 07, 2015(LBO) – Sri Lanka’s controversial Chinese funded port city project builders said that the government is yet to invite the company for discussions or issue a directive regarding the project review process, which is currently underway. The Chinese companies involved are China Communication Construction Company (CCCC) and the Project Company of the Colombo Port City. The new regime suspended the project in March this year due to a pending investigation report. The 1.4 billion US dollar Chinese Port City is to be constructed between the Southern edge of the new Colombo South Port and the Fort Lighthouse. The total area of sea to be reclaimed is 252 hectares. The project company said that it has requested for an opportunity to express its concerns regarding the temporary suspension. The companies are willing to fully corporate with the government appointed committee to review the project during the process. “The Project Company complied with the suspension notice issued on March 6, 2015 immediately and as per the directive given by the Sir Lankan Government, submitted copies of all permits and approvals within two working days,” the company said in a statement. “The Company notes these permits and approvals were originally issued by the relevant competent authorities of the Government of Sri Lanka and the Sri Lanka Ports Authority (SLPA), clearly directing the Project Company to commence reclamation work of the Colombo Port City,” “In keeping with the agreement signed between the Project Company and the Sri Lankan Government, the responsibility for securing approvals and permits relating to the project is vested with the Government of Sri Lanka and SLPA, whilst the commercial risk of the project is being absorbed by the Project Company, as the total project development cost of approximately USD 1.4 billion, is invested by the Project Company.” However there were concerns by the ministers of the new regime, that the project approval has violated the country’s law. In an earlier interview with LBO, investment promotion minister Kabir Hashim said, “For now it seems a breach of law. The Ports Authority who was involved in this project doesn't have the power to undertake a mixed development project like this," The government has appointed a cabinet subcommittee headed by the Prime Minister to review the project owing to the allegations of violating the country’s law. The committee will receive observations from the attorney general, environment authority, ports ministry, board of investment and finance ministry before reaching a final determination. The government also argued earlier that the project has not given an Environmental Impact Assessment (EIA) study but the appointed committee to review the project had then found that an Environment Impact Assessment (EIA) had been conducted on the reclamation. “The commissioning of the Environmental Impact Assessment (EIA) study and other permits and consents, in keeping with the agreed Public-Private Partnership (PPP) structure of the project, were secured by the SLPA and was then referred to the Project Company,” the project company said. “Sri Lanka port authority engaged with the University of Moratuwa, to conduct the EIA,” “The company reiterates that EIA was commissioned by the SLPA, in keeping with the Terms of Reference (ToR) formulated by the Sri Lanka Government appointed Technical Evaluation Committee (TEC) comprising senior officials and agencies from Sri Lanka including the Coast Conservation Department and the Central Environmental Authority, Geological Surveys & Mines Bureau and the Department of Archeology. The EIA study was approved by the TEC and the Coast Conservation Department, the project-approving agency.” The project company states that the construction of the Port City and dredging following the signing of the aforesaid agreement with the Government of Sri Lanka on 16 September 2014 which specifically provided that the Project Company shall commence reclamation work forthwith and after being informed that the necessary approvals are in place as per the letters issued by the SLPA. The Project Company said it has prepared detailed feasibility reports that have been evaluated by the international lenders to the project, prior to drawing down of the debt component. However the Sri Lankan government allowed the Chinese construction company to build the 3.25 km long break water, an offshore barrier of the port city in order to prevent damage from heavy rains and sea erosion to the project. According to earlier reports about 125 hectares of land area out of the total land area will be owned by the Government of Sri Lanka, whilst the rest will be retained by the Chinese company to cover their costs of expenditure. But ministers of the new regime earlier raised questions about China owning Sri Lanka lands. Replying to that the company said : “The land allocation in terms of the concession agreement was negotiated and agreed between the Sri Lanka Government and the Project Company, taking into consideration inter alia all aforesaid matters and in particular, the fact that the total cost of the project is financed by the Project Company.”