Colombo port city project, a reality soon

By Shirajiv Sirimane

It was our ancestors that first discovered the value of the shipping industry and this was how the 'silk route' was created making the then Ceylon a naval hub in the world. The foreign invaders took a cue from this and redeveloped the harbour network not for the love of Sri Lanka but to use the harbours for their economic gain.

However in the late 1960s the harbour sector suffered severe setbacks with a series of strikes which drove away the competitive edge the Colombo harbour had in the region.

Capitalising on these factors both Dubai and Singapore reinvested heavily to redevelop their harbour network and successfully managed to be the two key ports to major shipping lines to the world. Some of the stalwarts in the local shipping industry had urged successive governments to reinvest in the harbour network but these proposals were only confined to the drawing boards.

Chairman Master Divers, Ariyaseela Wickramanayake said that he even spent his own money to do a feasibility study on a proposed harbour to Hambantota and had forwarded them to several political leaders but with no avail.

"It was only when I gave it to the then Prime Minister Mahinda Rajapaksa that things started moving and a harbour was finally opened allowing Sri Lanka to once again gain a competitive advantage as a regional shipping hub. "I still say this project is 10 years behind time. But its better late than never as the country is slowly but surely is reaping economic benefits from this project," he said.

Sacrifice

Similar plans for the re-development of the Colombo Port have once again begun. These two harbours have allowed Sri Lanka to slowly but surely regain status as a world maritime hub.

To add more teeth to the plan 'Sri Lanka - a world maritime hub', a harbour city plan is to be re-implemented.

The plan for the Colombo harbour city project was first drawn up by the UNP government that was in power during the 2004 era. Under this plan 233 hectares were to be acquired in Colombo area which included land from Slave Island, Mattakkuliya Kotahena, Peliyagoda and also a part of Galle Face.

However, knowing the plight of the people who would have had to sacrifice over 230 acres of living space President Rajapaksa drew up a plan to get this space by reclaiming land from the sea. This was how the Port City project came in to the limelight.

Imagine the relocation of 233 hectares of prime residence and business establishments from the heart of Colombo if the former proposal was in place. This meant that another 233 hectares of land from city had to have been sacrificed from the city for relocation.

But now without relocation Sri Lanka is getting around 233 hectares of additional land and the country would be a proud owner of a new island!

However its sad to note that the very people who wanted to 'rob' 233 acres from the people of Colombo and create a port city are now crying foul for these projects that not only bring economic benefits, but help elevate the country which not only builds highways but also artificial islands.

Chairman Port Authority (SLPA) Dr. Priyath Wickrama said that Port City project would be the single biggest private sector development in the history of Sri Lanka. The biggest advantage of this project is that the government does not have to spend a single cent to create this island.

Free

The developers would also provide free of charge 125 hectares of land to the SLPA. "From this land we can pay all our lands we obtained to build the Colombo South Harbour, Hambantota, Oluvil and for development for Galle and Trincomalee," he said.

"ÓSLPA 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. Sri Lanka Ports Authority (SLPA) will receive a large financial benefit by granting these land extents on long term lease 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."

The developer gets 20 hectares as a grant to cover their costs and the balance on a 99 year lease.

The investment in its initial stage for the project comes to US$ 1,340 million which is US$ 1.34 billion. This project 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 that 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.

Permission

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, a release from the SLPA said. On the 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, Sri Lanka Ports Authority (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 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.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 release further says.

Consultation

The developer agreed to obtain the service of U.R.S. Infrastructure & Environment U.K. - the consultancy company who 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. U.R.S. Infrastructure & Environment U.K. becomes the best institution in this regard due to its experience of offering consultation to a similar project since inception.It is 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 large project that involves a land reclamation which requires breakwater protection and look after the marine environment.

Sri Lanka Ports Authority is the only institution in Sri Lanka who 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. Many parties' and persons' reports 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, whereas 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 a 99 year lease basis to sustain expenditure and earn revenue.

Procedure

Accordingly, the investor, at the initial stage owns only the sea bed. The procedure in this regard therefore, will be leasing the sea bed. 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 sea bed. To receive the internal rate of return of the investment as at 16 percent, 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 Sri Lanka Ports Authority (SLPA), the Board of Investment and the Urban Development Authority.