Settling Colombo Port City impasse

During the pre-election period, serious allegations were made against the Government for excessive costs and massive corruption in the awarding of large public projects. It was claimed that the costs of some road projects were several-fold over the similar projects built elsewhere in the world and that the Chinese contractors were awarded contracts at exorbitant prices.
Heavy criticism was directed at the recently-built expressways, especially the Outer Circular Road currently under construction, and the proposed Expressway to Kandy, for which then-President Rajapaksa laid foundation stones on his birthday. Allegations were also made against the Colombo Port City Project under development by a Chinese investor and Ranil Wickremesinghe informed the public that they would scrap the project if the Opposition won the 2015 presidential elections.
Maithripala Sirisena won the presidency over a promised honest, transparent government and public are clamouring to expose and penalise those responsible for misdeeds; and to cancel such projects.

 

 

 

 

 

 
Immediately after elections, the China Communications Construction Company (CCCC), the promoter of Port City, informed reporters that they have obtained all necessary prior approvals. The Cabinet Spokesman informed the reporters of the Government’s acceptance of the project. But a few days later Prime Minister Ranil Wickremesinghe denied the statement and informed that a committee had been appointed to reassess the deal and the requirement to renegotiate with China over the tax concessions given to the developer and land ownership issues.
The Port City project is facing continuous allegations from groups concerning environmental issues, which is being highlighted by media in daily programs, and the airing of comments by the public who are mostly ignorant of the issue has completely twisted the situation.
With an election looming in a few months, the Government – sensitive to public opinion – appointed a committee and a Cabinet sub-committee to look into the issue. Meanwhile, the developer continued construction, which was highlighted daily by the media. Finally, the Cabinet Spokesman informed the public that “the Cabinet, considering the interim report of the Committee, decided to temporally suspend the project and advise the Chinese company to submit its approvals obtained within two weeks.”

 

 

The Colombo Port City
The development of the Port City as proposed by CCCC involves reclamation of 233 hectares (576 acres) from the sea. Sri Lanka will own rights to 125 hectares of the reclaimed land and 20 hectares will be held by China Communications, with the remaining 88 hectares on a 99-year lease to be sold to potential investors.
The Colombo Port City project, the largest foreign-funded investment in Sri Lanka, commenced on 17 September 2014, by Chinese President Xi Jinping, is expected to cost $ 1.5 billion.

 

 

Statement by CCCC
Amid various allegations and moves to stop the Colombo Port City Project, the project proponent CCCC, in a press advertisement informed it would “extend its fullest cooperation to the Sri Lankan Government and provide all necessary information for the purpose of assessing and reviewing the Project”.
The company, ranking 187th in 2014 among the ‘Fortune Five Hundred’ companies in the world, claims, as a responsible corporate, that all necessary procedures were followed in the initiation of the project.
The company claims that prior to undertaking the development of the project in 2010, an initial Technical Feasibility Study and Environmental Impact Assessment of the Project was performed by the University of Moratuwa, under the directive of the Sri Lanka Ports Authority.
The Technical Feasibility Study was approved by the Sri Lankan Government and the EIA was published for the public benefit. Once public inquiries were answered, the EIA was approved by government-approved agencies. Additionally, an Environmental Management Plan (EMP) was submitted by CCCC and approved after monitoring the project’s environmental and coastal impact, as per the requirements of the EIA.
The total duration of the process from submitting the proposal to signing the agreement, extended to four years, to ensure all procedures of the Government’s procurement regulations were followed.

 

 

Background
According to the company, the first attempt for a Port City was made by the Singaporean company CESMA in 1998. The final plan published on 2004, developed by the Sri Lankan and Singaporean team, proposed a ‘Western Region Megapolis’ by 2030. However, the concept could not be implemented due to the vast cost in building the breakwater in deep water to protect the reclaimed land.
The Port City became financially feasible only when the breakwater was integrated with the Colombo Port Expansion Project. According to the company, they sought the expertise of internationally-reputed development consultancy firms in assessing viability of the project.

 

 

Ranil Wickremesinghe proposals
It would be interesting to note the ‘Western Region Megapolis’ mentioned by CCCC was the proposed ‘Colombo Metropolitan Regional Structure Plan 1998’ developed by the Kumaratunga Government in the late ’90s.
The proposal was highlighted in an article by Ranil Wickremesinghe in the Sunday Times of 25 September 2011 under the heading ‘Colombo is Colombo’ (http://www.sundaytimes.lk/110925/News/nws_28.html). Following are extracts from the article:
“The CESMA final plan, developed by the Sri Lankan and Singaporean team, proposed a Western Region Megapolis – stretching from Negombo to Beruwala with the city of Colombo as the core. The CESMA Plan provided the answer – a Megapolis of 8.5 million, which was envisioned as the only planned city in South Asia.
“The plan proposed an inner necklace from Moratuwa to Ja-Ela and an outer necklace from Negombo to Homagama and Kalutara. The Colombo Core was to be a high-density area with major facilities. The inner necklace was to consist of self-contained townships and was to be a medium-density area. The outer necklace was conceptualised as low-density townships.
“According to the proposal, Fort, Pettah, Kollupitiya and Maradana with a total land area of over 1,033 hectares were envisaged as the New Downtown containing the Business and the Financial District. Slave Island and Galle Road were to be the shopping areas.

 

 
“The business district was to be extended by filling the sea (and adding over 20 hectares to the city) from opposite the turn-off to the present Ministry of Defence to the South Port extension, allowing for the historical landmark of the Galle Face Green to continue overlooking the sea.
“This was the first-ever proposal to extend the city to the sea. Yet many are now claiming authorship for such proposals. The Port, Mattakkuliya, Grandpass and Kotahena (an area of 928 hectares) were to become the Port City with a cargo and logistics hub as well as a large residential neighbourhood.
“The Plan was completed in April 2004. By then I had ceased to be the Prime Minister. Therefore the official copies of the three-volume Plan were handed over to the then Prime Minister Mahinda Rajapaksa. For reasons best known to the UPFA Government they did not proceed with these plans.” (End of extracts)
Can one understand how Ranil Wickremesinghe, who proposed and supported the extension of the business district by filling the sea, would be in such opposition to the Port City?

 

 

EIA acceptance of Port City
Now it has emerged that the Port City proposal has been accepted by EIA, but there are many shortcomings in the report. The EIA approval had an Environmental Management Plan submitted by CCCC; ensuring these conditions were respected by the developer is the responsibility of the client. When a project is accepted by the EIA, does the Prime Minister have the power to overrule the EIA?
It is claimed that during the Cabinet approval of the Port City Project, the Cabinet paper was submitted in the morning and accepted in the evening. If the approval procedure of EIA and the Cabinet was faulty, can the developer be held responsible?
People are questioning, now that the Cabinet has decided to suspend construction of Port City, who will be responsible for the removal of rocks and other materials already deposited.
On the developer’s point of view, he has followed the correct procedure and obtained all legal requirements and approvals for the project. But the tax holiday agreement under the ‘Strategic Development Project’ needed to be accepted by Parliament within three months of commencement, but the present Government refused to submit the necessary papers to Parliament for acceptance. As such, the tax holiday would be in question, but the construction is legal.
The non-following of proper EIA procedure prior to approval and hurrying through the Cabinet needs to be answered by the responsible officials and the Cabinet members, some whom are presently with the current Government.
In case of revocation of agreement, the developer could claim damages either in local courts or in international courts. It would be interesting to look into past incidences of similar nature.

 

 

Katunayake Expressway
The Katunayake Expressway was under construction by a Korean contractor under the Chandrika Kumaratunga Government. With the changes on the political front, Ranil Wickremesinghe was appointed Prime Minister in December 2001. The tight monetary policies of the new Government reduced payments to the contractor and the progress slowed down, resulting in termination of the contract in January 2003. But the contractor was not settled his dues.
Three years later, when the Rajapaksa Government wished to re-start the project, the former contractor had to be settled first. Years afterwards the RDA had little leeway in negotiation on the contractor’s claim and in settlement the contractor was paid Rs. 2,794 million.
If the Port City too were to be terminated abruptly, Sri Lanka will have to pay a massive sum in settlement and relations between the two countries would be strained.

 

 

Port City’s environmental concerns
Can the Port City project create an environmental disaster as claimed by the so-called environmentally concerned groups and the protesters? The Port City is a construction into the sea and will definitely have an impact. But the constructions and breakwaters of Port City do not extend beyond the breakwaters of the Colombo South Port.
In Sri Lanka, sand brought by the flowing rivers to the sea are carried northwards by the ocean currents. Sand gets deposited on the shore at some locations and currents erode the shore on other locations, depending on the physical formation of the sea bottom and speed and direction of the currents, which in turn may modify with wind speed and direction. The study of sea erosion of a location is a complex study conducted by specialists on the subject.
The newly-developed Colombo South Harbour boasts of 18m depth and an access channel of 20m depth for ship movement, as opposed to the previous 15m and 16m respectively. This means the new harbour’s access channel requires constant dredging and maintenance of additional depth of 4m from the sea bottom, commencing from the harbour mouth until sea depth reaches 20m. This continuous dredging results in practically all sands arriving from south Sri Lanka being dredged away, an extremely serious situation which would affect coastal areas north of Colombo.
The Port City’s breakwaters would only divert the currents away, but the harbour’s breakwaters extend beyond, so the effects of the Port City’s breakwaters would be minimal. As such, compared to environmental damage caused by Colombo South Port, the effect of the Port City would be negligible. Any activity, construction or otherwise affects the environment and attention needs to be paid to positive returns vs. the negative damages.

 

 

Water supply and sewage disposal
It has been pointed out that Colombo’s water supply and the 200-year-old sewerage disposal system cannot cope up with the demands of the Port City. The numerous development projects under development and proposed in Colombo, especially around Galle Face, would face the same problem and the Colombo Municipality should draw attention to this immediately.

 

 

Security concerns
In the approval of 20 hectares to be held by China Communications and the remaining 88 hectares to be sold on 99-year leases to potential investors, has any agreement been reached by the promoter with the Government on the basis of usage acceptance and security concerns of Sri Lanka? The absence of an accepted basis of usage of land held by CCCC and awarding to other investors needs to be ironed out with the developer.
The Government requesting the developer to submit approvals obtained for scrutiny raises another concern. The Government agencies which gave approval for the project should have details of communication and originals of approvals. Have these files been misplaced or removed by interested parties?

 

 

Way forward
During the pre-election period, members of the present Government made various promises without inquiring in-depth; now under the 100-day program and with a looming election, the public is clamouring for the new Government to honour election pledges. The Government, especially the Prime Minister, is in a tight spot and the Government needs to show the public some action; as a result, construction was suspended.
The Port City Project was inaugurated by the President of China and cancellation of the project would have serious concerns in bilateral relations between two countries.
The construction of the Port City without any cost to the Government and Sri Lanka getting 125 hectares of reclaimed land is a profit to the Government. The improvement of the 200-year-old sewerage disposal system is long overdue and the Chinese would be happy to offer a concessionary loan for the improvement. Large employment generation during construction and afterwards with new investments would benefit the country. As shown before, negative environment concerns of the project are minimal as most problems were due to the Colombo South Harbour.
The approval methodology of the EIA and by the Cabinet of the previous Government has been questioned by the public and the people showed their resentment by overturning the Government. CCCC as project developer cannot be held responsible for the past Government’s actions.

 

 
The cancellation of the project can lead to CCCC claiming damages in international courts and Sri Lanka would have to pay enormous sums. Removal of construction already carried out will turn out be a costly exercise.
The only concern is the usage of land by CCCC and other investors over security concerns. A method of screening projects, with power to enter and inspect regarding the country’s security concerns, need to be discussed and agreed upon. Surely China will understand and problems could be solved in a mutually-satisfactory manner.
The public needs to be informed that the Government of Sri Lanka has signed an agreement which is internationally valid and the country is to gain by the entire project. In the event of cancellation of the project, the Government may have to pay a large sum to the promoter. The possible environmental problems have already been caused by the Colombo South Port Project. The country does not undergo any expenses over the project, but will benefit financially and economically from the project.
The nation needs to have good relations with every country and China has been a good friend of Sri Lanka. Regarding the lands to be given to developer and offered to investors, Sri Lanka has security issues, which could be amicably settled with a mutual understanding with the Chinese developer.

 

(The writer is a Chartered Civil Engineer graduated from Peradeniya University and has been employed in Sri Lanka and abroad. He was General Manager of State Engineering Corporation of Sri Lanka. He can be contacted on tudor@rivendaleresort.com.)