Port City: Govt and Chinese investor settle issues: 

Flagship development project gets off the ground

by Ranil Wijayapala

After many months of scrutiny on the US$ 1.4 billion Colombo Port City project, the single largest foreign direct investment project in the island is to get off the ground in the coming weeks, after the Sri Lankan Government and the Chinese investor amicably settling some thorny issues, following the conditional environmental clearance issued on March 8.

The government is now in the process of re-negotiating the terms and conditions of the Concession Agreement which is to be signed between the Government and the Chinese investor soon, stipulating the services and benefits shared between the Government of Sri Lanka and the investor through the implementation of the project.

"At present there is no barrier for the Chinese investor to restart the project as the necessary clearance has already been given by the government for the project to go ahead", Secretary to the Megapolis and Western Development Ministry, Nihal Rupasinghe told the Sunday Observer.

The Urban Development Authority under the Ministry of Megapolis and Western Development is now coordinating the Colombo Port City project as a part of the Megapolis development plan, the flagship development project of the government.

As a part of these on-going negotiations on the Concession Agreement, the Government is also negotiating with the investor on the 125 million US dollars claimed by the investor as compensation for suspending the project for nearly one year.

The matter, however, was due to be raised during Prime Minister Ranil Wickremesinghe's visit to China last week as the Government claimed that it was not in a position to pay such compensation to the Chinese investor for the suspension of the project for nearly one year

"Therefore, the Government is hoping to arrive at a conclusion over the Concession Agreement that is to be signed probably in May between the Government and the Chinese investor based on the outcome of the on-going negotiations and also based on the Premier's discussions with the Chinese government during his visit to China", Rupasinghe added.

However, he pointed out that the Government is in a strong position to negotiate over the 125 million US dollar claim by the Chinese investor, based on the argument that it has not taken the requisite approval for the project to go ahead without any interruption by the Government.

The Coast Conservation and Coastal Resource Management Department on March 8, 2016 gave its conditional approval for the project based on the Supplementary Environmental Impact Assessment Report by the Megapolis and Western Development Ministry. The new project proponent on behalf of the Colombo Port City project stipulates 72 conditions to be adhered to when the projec is implemented..

On lease basis

Apart from the US dollar 125 million compensation issue, the Government has also negotiated quite a number of other issues with the Chinese investor, and they have already come to an agreement with the Government over the use of lands on lease basis, deviating from the earlier agreement of giving them the ownership of the reclaimed lands as an outright grant.

"The Chinese investor has also agreed to handle the reclaimed lands under the project through a joint committee comprising the Sri Lanka government and the representatives of the Chinese investor", the senior official added.

The Concession Agreement will also focus on the the supply of electricity and water for the project and several other issues that were raised when the project was under review.

"The negotiations over these issues are expected to be completed by the end of this month based on the outcome of Prime Minister Ranil Wickremsinghes's visit to China and the Concession Agreement is expected to be signed in May with the Chinese investor overcoming all the hurdles prior to the project getting off the ground", he added.

Meanwhile, some experts who closely followed up the progress of the project told the Sunday Observer on the condition of anonymity, the project has become a factor of salvaging Sri Lanka's economy from the present stagnation and crisis situation, rekindling Chinese funding back to the country.

"Therefore, we are more of the view that the government renegotiates the agreement and it should not become a project which would hamper the future infrastructure development projects in the country or that could thrust a huge economic burden on the country".

"Those negotiations should make sure that the project would attract further foreign direct investments to the country which can give the due share of benefits to the country, considering the enormous resources and commitments the Government has to make for this project to be a success.

The experts, therefore, say that Sri Lanka should not disregard or underestimate the resources it commits, such as sea extent, sand and quarry material and other resources required for the Colombo Port City project when negotiating and sharing the benefits of the project.

"The huge investment Sri Lanka should commit on the project in providing electricity, water and for waste management has to be taken seriously when sharing the benefits of the projects.Else, this will become a huge burden to the country", they added.

According to Director General of the Coast Conservation and Coastal Resources Management Department, Prabhath Chandrakeerthi, the project approving agency, they have laid down strict conditions when issuing permits for the reclamation of the sea bed area to form 269 hectares of land within the total project area of 446.61 hectares.

Breakwater

In the earlier Environment Impact Assessment report which was done by the Sri Lanka Ports Authority, approval was given only for the reclamation 232 hectares of land area.

"In the previous EIA, they had not covered beyond the reclamation area and they have not included the breakwater. In this report they have covered the entire project area including the breakwater", he added.

"Accordingly, approval was granted for the entire project area and dredging of the 65 million cubic meters of sea sand, construction of offshore breakwaters, edge revetments/sea walls, submerged groynes, inner breakwater, sand barriers, marina basin, lagoon, canal artificial beaches and other coastal protection structures, supply of approximately 3.45 million cubic meters of rock material for marine structures and to construct groynes on the southern side of the Beira Lake outlet", he said.

According to Chandrakeerthi, approval has been granted only for the reclamation of the sea bed and dredging for sand mining. For the construction they need to submit a separate EIA as those aspects are not covered in this EIA report.

"They have not given any idea about the construction they are going to have in the reclaimed land", he added.

According to Director Coastal Resource Management of the Coast Conservation and Coastal Resource Management Department,Gamini Hewage, when granting approval for the project they have laid down a series of conditions and one key condition is that they should seek approval of the President for any reclamation of sea.

"According to the Land Ordinance they have to get the authorisation from the President for dredging the sea bed and reclaiming the sea bed.Without the authorisation of the President they can't carry out the reclamation of the sea for the project", he said.

According to the conditions laid down by the CCD, sand extraction can only be done from the sea area - three kilometers away from the shore line to minimise the impact on the fishermen and the fishing breeding ground.

"In the Supplementary EIA, they they have identified two locations for sand extraction and one location they have identified is a little bit close to the shoreline. Therefore, we laid down the condition that they extract sand only from the site one area, that is located three kilometers away from the shoreline", he added.

This is to ensure that f the ing breeding grounds located within the three-kilometer boundary will not be disturbed through sand mining..

"During the construction period, they should make the necessary arrangements for the nourishment of the beach area for fishermen and the fishing community to land their fishing gear. They have to create an artificial beach for fishermen putting 300,000 cubic meters of sand for he nourishment of the northern side of the project area during the construction period", he said.

Fishing community

"They have to allocate Rs.500 million to the Ministry of Fisheries not as compensation but to improve the livelihood of the fishing community in the affected region", he said.

If there is sea erosion or any environmental issue, the project proponent has agreed to provide solutions for these issues.

With regard to the supply of quarry material for reclamation, they have to obtain quarry material from the Geological Survey and Mines Bureau and the Central Environment Authority approved metal quarries in the country and cannot go for new quarry sites.

According to the SEIA report, the project proponent will use the northern harbour entrance to enter the project site and use barges to transport quarry material to the site.

"We had a special committee when granting approval for the project. In this report, we covered all aspects of the project and the technical committee appointed by the Coast Conservation Department studied the report. In the special committee, there were professionals and we prepared the terms of reference in consultation with them", he added.

"We are monitoring the project throughout the implementation process and there is a monitoring committee also.They have to submit the environmental management plan before implementation and this will be the basis for monitoring during the construction period", Hewage said.