Cabinet gives nod for Hyatt
Approval comes many months after recommencement of work
By Uditha Jayasinghe
Cabinet yesterday approved work on a controversy-ridden US$ 159 million (Rs. 20 billion) hotel, which will be managed by Hyatt under its brand upon completion in 2013.
According to the Government Information Department and the news.lk website, Cabinet approval has been given for the Rs. 20 billion Hyatt project proposed by the Minister of Economic Development Basil Rajapaksa.
“This project is to be implemented by Sino Lanka Hotels & Spa (Pvt.) Ltd. as a strategic development project under the Strategic Development Project Act No. 14 of 2008, which provides a series of concessions for a specific period. It includes a corporate tax holiday as well,” it said.
Hyatt Resorts will be given management of the hotel on its completion for an initial period of 20 years. The venture, which will have 475 rooms and 90 luxury residential suites, will be built by local company Sinolanka Hotels and Spa.
The project, according to a post on the Government website, is expected to be ready for when Sri Lanka hosts the Commonwealth Heads of Government Meeting, which it will chair in 2013.
“The Sri Lanka Government, by way of revival of this property, would be able to meet part of the accommodation facilities required (6,000 rooms) for the forthcoming Commonwealth Heads of State Conference to be held in Colombo in 2013,” the web post added.
It noted that the Cabinet in March granted approval to expedite revival of this property but no such agreement was disclosed to the media during March 2012.
The project has been mired in controversy after the Government appropriated the property from the bankrupt Ceylinco Group under a disputed Revival of Underperforming Enterprises and Underutilised Assets Act passed in 2011.
Subsequent newspaper reports also pointed out that the Government had underpaid for the property at Rs. 4.2 billion (US$ 32.3 million) when it was valued at Rs. 9.2 billion (US$ 70.7 million).
The money from the sale was to have repaid hundreds of creditors of subsidiary companies under Ceylinco, according to the reports.
In August, Parliament approved a slew of tax concessions for the project including a 10-year income tax exemption while the tax on dividends distributed to shareholders out of profits were also given exemption.
The tax exemption period will begin from the first year in which the project company makes taxable profit or three years after the start of commercial operations. At the end of the tax exemption period, the company will continue to enjoy special tax concessions, having to pay only six per cent or one half of the prevailing tax rate for the hotel industry, for 15 years.
