Port City Project cleared for sailing - Opportunity Sri Lanka
Port City Project cleared for sailing

Port City Project cleared for sailing

• Cabinet approves renegotiated Port City agreement with China
• According to the consultations of the new Government, no land will be granted on a freehold basis, and all the lands will be on a 99-year lease basis.
• The CCCC has agreed to drop its $ 125 million compensation claim for the duration of the project’s suspension.
• Minister Senaratne also explained that the new agreement would include an extended list of environmental conditions.
• The previous agreement contained 42 environmental conditions while the revised agreement would contain 70.
• The agreement is revised in a manner advantageous to Sri Lanka.
• The Government is hoping to make the Colombo Port City the main financial district between Singapore and Dubai.

The Government will ink a revised agreement with Chinese construction firm China Communication Construction Company (CCCC) to resume work on the Colombo Port City with the company agreeing to drop its $ 125 million compensation claim in exchange for additional land in the reclaimed city.

The Colombo Port City project to create a 500-acre city built entirely on land reclaimed from the ocean was suspended in March 2015 after President Maithripala Sirisena’s Government raised concerns about the terms of the agreement inked between the Chinese company and the Rajapaksa administration as well as the environmental impact of the reclamation project.

Cabinet Spokesman Rajitha Senaratne announced yesterday that a revised tripartite agreement would be signed in September between the Ministry of Western Development, the Urban Development Authority and the CCCC.

“Our opposition was to the fact that land in our country was going to be owned in full by another state,” Minister Senaratne told the Cabinet briefing last morning.

“Even India raised objections to China owning land in Sri Lanka,” Senaratne said, adding that the Government had renegotiated the 20 hectares of freehold land to be granted to the China Harbour Engineering Corporation Port City Ltd. as a 99-year extendable lease.

“According to the consultations of the new Government, no land will be granted on a freehold basis, and all the lands will be on a 99-year lease basis.

If the Government does not require these 20 hectares, the company may obtain the land for another 99 years,” the Cabinet decided on Monday.

Minister Senaratne said that once the land was reclaimed, the land would be taken over by the Government and gazetted as land belonging to the Colombo District. “Then it will be handed over to the UDA which will sign the 99-year lease,” he explained.

The Cabinet Spokesman said that the Government had “solved a big problem” because if the previous agreement had been allowed to stand there would be major problems associated with the reclaimed territory.

Minister Senaratne added that the Chinese construction company had also agreed to drop its $ 125 million compensation claim for the duration of the project’s suspension. “But by way of compensation for the losses incurred by the company, the Government has decided to award a further 2 hectares that can be sold on a 99-year lease.”

OSL Take:

The Port City is now cleared for fast-construction and Sri Lanka can look forward to the benfits of its increased capacity for maritime operations in the near future.

OSL as the pro-active FDI generator to the island, now calls upon Chinese investors to partner with OSL to bid for the Port City Related Projects open for investment through the PPP model.

Have a consulatation with the biz-friendly OSL Team today to learn more on the scope available and the way to move forward.

Potential of the Colombo South Harbour Development Project:

• The Colombo South Harbour Development Project, presently under construction, would be positioned as the best transshipment cargo handling hub in the South Asia region, Asian Development Bank (ADB) Country Director Dr Richard Vokes said.
• He said ADB has agreed to an alternative plan that would allow for the construction of the breakwater for the new Colombo South Harbour, with US$ 300 million funding from the bank. An earlier arrangement involved an open and transparent awarding of the contract for building the new harbour’s first terminal.
• Therefore, details and a final confirmation of the new deal will not be available until early next week.
• The Colombo South Harbour will mainly focus on handling transshipment cargo in the subcontinent. At present, the Port of Colombo alone handles 15 per cent of transshipment cargo in the subcontinent.
• The Colombo South Harbour will be located west of the present south-west breakwater in an area of about 600 hectares.
• The harbour will have four terminals of over 1,200m in length each to accommodate three berths alongside depths of 18m and provision to deepen to 23m to accommodate deeper draft vessels of the future.
• The channel width of the harbour is to be 560m and depth of 20m, with harbour basin depth of 18m and a 600m turning circle. The harbour will boast the latest generation of yard planning and container handling equipment and techniques.
• The project will raise the capacity of the Colombo Port from the existing around four million TEUs annually to about 12 million. The first terminal is likely to become operational in 2010 and will have a nominal capacity of 2.4 million TEUs.
• The project is part of the Colombo Port Expansion Project, the largest project undertaken by the Sri Lanka Ports Authority with a $1200 million investment.
• It is a Government built-and-owed harbour facility and will have a private-public partnership in the provision of terminal services.
• In addition, the SLPA will be the overall landlord, with an equity stake in each terminal.
• The Asian Development Bank has pledged a US$ 35 million loan towards the commencement of the project. The completion is scheduled for 2010.

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Article Code : VBS/AT/03082016/Z-3

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