Port City ready for take off
With new Agreements specifying new conditions:
by Ranil Wijayapala
The stalled Port City project will get off the ground when the new
Agreement between the Government of Sri Lanka and the Chinese Government
comes into operation, quashing scepticism that the former Agreement
signed by the Rajapaksa regime would stand. State Minister for
International Trade, Sujeewa Senasinghe refuted this claim and said a
new Agreement has been drawn up clearing doubts and will be signed
shortly after resolving legal, security and environmental issues over
the Colombo Port City Development project.
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Reclaimed land being filled
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He told the media that a new Agreement will be signed with China
Communications Construction Company Limited (CCCC), the investor of USD
1.5 billion for the project, overwriting some of the contentious issues
in the existing Agreement drawn up by the former regime. According to
the new Agreement, State Minister Senasinghe said China will not have
outright ownership to a portion of the land in the Port City nor will it
be able to dock ships or planes without prior permission from the Sri
Lankan government. That was a security concern not only for Sri Lanka
but also for neigbouring India with regard to the Port City Development
project. India raised this issue on several occasions during bilateral
discussions between India and Sri Lanka.
Scepticism over Chinese investment in Sri Lanka and Chinese- funded
projects was the most debated issue in the country after the regime
change in January this year. The Colombo Port City project was the
hackneyed topic in the past few months.
New Agreement
According to the new Agreement to be signed shortly, State Minister
Senasinghe said China will not have outright ownership to a portion of
the land in the port city nor it will be able to dock ships or planes
without prior permission from the Sri Lankan government. That was a
security concern not only for Sri lanka but also for the neigbouring
India with regard to the Port City Development project, and India raised
this issue on severla occasions during bilateral discussions between
India and Sri Lanka.
The USD 1.5 billion investment undertaken by the CCCC with the
blessings of the previous government led by Mahinda Rajapaksa irked
environmentalists, civil society organisation and politicians for not
adhering to stipulated procedure when making such investment in Sri
Lanka.
The main criticism was the project was not subjected to proper
environmental clearance and Environment Impact Assesment(EIA) was done
in a haphazard manner without addressing the main concerns raised by
environmentalists, marine biologists and civil society groups.
The project extends to about 270 hectares on reclaimed land adjacent
to the Colombo Port. The Minister said that an EIA report on the project
has also been finalized clearing a major hurdle for the commencement of
the project. Like the Port City project, many of the Chinese funded
development projects which were suspended for review after the regime
change have also been put back on track after some negotiations with the
contractors and the funding agencies. It was mainly the China funded
road development projects that were suspended for review by the
Government.
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Second stage of the Outer
Circular Highway from Kaduwela to Kadawatha
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The Outer Circular Highways, the Southern Expressway Extension
project and the Kandy expressway presently known as the Central
Expressway are the China funded projects that have been reviewed by the
Government. According to the Highways Ministry officials, the main
concern of the Government was to reduce the costs of the projects as it
was of the opinion that many of the highway projects which were
initiated under Chinese funding by the previous government were too
costly.
The Government has by the reviewing process made some savings, though
not substantial. Some construction projects have been halted as such
investment at present was a waste considering the impact of traffic
congestion in 20 years.
The Southern Expressway Extension upto Hambantota was started on July
4, after negotiations with the Chinese funding agencies and contractors.
The first phase of the project is from Godagama to Beliatta and the next
phase is from Beliatta to Wetiya, Wetiya to Hambantota via Andaraweva
and then the Hambantota Port access road.
The 96-kilometre Southern Expressway Extension project costs Rs.
242.2 billion and is mainly funded by the EXIM Bank of China. The
construction contracts have been awarded to Aviation Industry
Corporation of China, China State Construction Engineering Corporation
and China Harbour Engineering Company Ltd.. China Railway First Surver &
Design Institute Group Co.Ltd will provide project supervision
consultation.
Honour
The Government was of the view that the Expressway should only go up
to Beliatta and from there it should be a highway with limited
accessibility and the next phase of the Expressway could be developped
after the Hambantota port is developed. However, the Chinese funding
agency has conveyed that the Government has already signed the Agreement
and it has to honour the Agreement.
The Government has already signed the financial Agreement for Section
I, Section III and Section IV of the projects while for Section II, too
financial assistance has been requested from China EXIM Bank but it has
not yet confirmed it", the official added.
The Outer Circular Highway (OCH) is the other project that was
criticized due to the high cost of the project. The contract for the
third phase of the OCH project from Kerawalapitiya to Kadawatha was
negotiated with the Chinese contractor and the funding agency, again,
the EXIM bank of China. The project has been estimated to cost Rs 64
billion to construct a 9.2 km Expressway from Kadawatha to
Kerawalapitiya. Out of the total length, 5.9 km of the road will be on a
viaduct.
"The Government proposed Rs.24 billion reduction in project costs by
reducing infrastructure in the six lane concept. In some places we
proposed to remove the viaduct and have an embankment, thus cutting
costs" a senior official of the Highways Ministry said.
The original proposal was to have provision for a six-lane road. The
contractor would create the necessary infrastructure to have a six-lane
road in the viaduct area but only a four lane road will now be
constructed.
"The changes suggested by the Government could save around 9 to 10
per cent of project cost", the official added. "We have removed one
inter-change and six- lane facility and not in the entire project but in
the viaduct area. Likewise, we have given some of our proposals to the
EXIM Bank of China and they were now agreeing to these proposals," he
said.
The Government has the right to make alterations upto 15 percent of
the project cost under the agreement reached between the two parties.
The Metallurgical Corporation of China Ltd. (MCC) which is the main
contractor for the third phase of the Outer Circular Highway has
commenced the construction work at present from Kerawalapitiya to
Kadawatha after the reviewing process.
The contract for the Northern Highway, now renamed the Central
Expressway has also been reviewed.
The initial plan to commence the project from Enderamulla has been
changed and will now commence from Kadawatha. The Government has given
the contract for the construction of the first five kilometres of the
Expressway to the Metallurgical Corporation of China.The money was from
the savings of the last phase of the OCH project.
But now the company has agreed to construct the first two kilometres
of the project including the inter-change from the savings of the OCH
project.
The original plan was to construct the Expressway from Galagedara to
Pothuhera, but now the Government has decided to commence the project
from Kadawatha because the public could then use it instead of starting
it from Galagedara to Pothuhera.
Loans
The Government is now negotiating with the China EXIM bank for
funding, while seeking funding from other financial institutions such as
the ADB and JICA to complete the other phases of the project. Many of
the projects reviewed by the Government were unsolicited proposals and
the Government has taken a policy decision not to entertain unsolicited
proposals unless it can make an impact to the economy and also to the
overall infrastructure of the country. "There was a Cabinet paper that
the Government will not entertain unsolicited proposals unless it is
important to the economy and infrastructure of the entire system. That
is why none of the unsolicited proposals for the construction of roads
was accepted," he added.
The Cabinet sub committee reviewing unsolicited proposals have kept
aside these proposals but it was not in apprehension over any country or
investor. The Government is of the view that if the proposals are on
commercial loans, the Government will not accept but if they are
concessionary loans they will be considered.
"At the moment non of the commercial proposals came for road sector
was accepted by the Government", the official added. According to
Finance Minister Ravi Karunanayake the Government aims to encourage the
investors from all over the world to come to Sri Lanka. "We like
investors from India, Europe, Singapore, Japan, America and the Middle
East to invest in Sri Lanka. Similarly we like Chinese investors to
invest here. But they have to adhere to the Laws of the
country,"Minister Karunanayake said. "During a particular period Sri
Lanka was only looking towards one country for investment. This needs to
be corrected. We are inviting everybody to invest in Sri Lanka. We want
to ensure investor confidence along with local investors", he added.
"Will any country allow another country to do something that is not
legal. We are telling investors to ensure legality. We want it to
happen. We want to ensure everything is legal and that is our goal," the
Minister said. |