The government last week said that following consultations with the developers of the Colombo Port City Project, it has been suggested that no land will be granted to the Chinese developer on a free-hold 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, however, obtain the land for another 99 years, the government announced.

CHEC Port City, a Chinese state firm incorporated in Sri Lanka, is to spend US$ 1.4 billion to reclaim 269 hectares of sea adjacent to Colombo’s main port.

Meanwhile, Sri Lanka is also planning to give China two extra hectares of land for sea reclamation in lieu of monetary compensation sought for temporarily suspending the project by the new administration that was elected in January 2015.

Cabinet spokesman Rajitha Senaratne said, the Chinese firm has agreed not to seek cash compensation for the delay.

“In their original Master Plan there was provision for night racing. They had fully abandoned that plan at present. In view of this, a large extent of marketable land becomes available. Out of this, 2 hectares may be allocated to them, without reducing the land extent of 62 hectares owned by the GOSL. This will be a gesture to reciprocate their goodwill in completely waiving off all compensation claims,” the government said.

It noted that the above proposal was acceptable to the GOSL since the project company  has  agreed in the new master plan approved by the UDA this year, to increase public lands (parks, roads, walkways, etc., to be used by the general public) by 28 hectares  more than originally planned to make Port City more attractive to the public. For example, when completed port city will have 45 hectares of parks and 13 hectares of artificial beaches (compared to 5.7 hectares available to the public at Galle Face Green).
Given below is a summary of other changes the Sri Lankan Government disclosed last week noting that these have been suggested to be incorporated in to the original agreement signed in September 2014.

Role of the SLPA
According to the original agreement the Ports Authority Act is to be amended to enable the Ports Authority to obtain 62 hectares from the project company for its use and development activities. According to the article 6 of the Act, this is limited to the objectives of the Ports Authority. Though the previous government has declared that Sri Lankan lands could be used for development of immovable properties, no such authority is granted under the article No. 6.

Under the new agreement, the Sri Lanka Ports Authority (SLPA) will not be assigned of immovable properties development and its responsibilities will be limited to activities allowed by the current Sri Lanka Ports Authority Act. Therefore, it has been decided that the most suitable institution to assign reclaimed lands is the Urban Development Authority.

Megapolis Ministry
Under the new agreement, responsibility of performing government responsibilities including amendment of the SLPA Act is vested with the Ministry of Ports and Shipping.
Instead of the agreement signed by the previous government on September 16, 2014, a new trilateral agreement will be signed among the Ministry of Megapolis and Western Development (on behalf of the government), UDA and the project company.

Legal status of land filling
The status of lands to be filled is unclear under the original concessionary agreement signed by the previous government. Those lands are not a part of the Colombo District. Hence, it is not considered as a land belonging to the Sri Lankan territory according to the article 5 of the Constitution. Under the new law, the land will be brought into the Administrative District of Colombo, and it will be assigned to the proposed Financial City Corporation out of the Colombo Municipal Council.

According to the original agreement, a key tax plan will be implemented by the SLPA related to leasing of lands to the project company. Under the new agreement, filled lands will be gazetted by the President under the Lands Ordinance and thereafter will be allocated to the UDA. The UDA will declare them as a development area under the UDA Act. This will happen before land is leased on 99 year basis to the project company.

Fishermen’s income programme
Under the original agreement, responsibility for funding the income support programme to fishermen was a responsibility of the SLPA. Under the new agreement, the project company will allocate Rs. 500 million towards the fishermen’s income support programme to the Ministry of Megapolis and Western Development to implement the programme in consultation with the Ministry of Fisheries.

Utilities and transport
Under the original agreement all investments in roads and utilities within the reclaimed area was the responsibility of the project company while providing all utilities and road infrastructure to the periphery of the site was the responsibility of the Government of Sri Lanka. Under the new agreement, the possibility of undertaking public-private partnerships through the project company will be evaluated as a long term solution to ease the GOSL’s responsibility of undertaking provisions of road infrastructure and utilities to the periphery of the site.

Management and maintenance
Under the original agreement, an Estate Management Company (EMC) 100% owned by the GOSL would manage, maintain, and repair the common areas of the Port City by collecting management charges from investors. However, until such time EMC is self-sustainable, GOSL or SLPA would have had to inject funds for the operation of the EMC.

Under the new agreement, the project company has agreed to consider establishing and operating the EMC in partnership with GOSL.

Limits on developing GOSL lands
The original agreement limits developments GOSL could undertake on its land during three years from the completion of reclamation to educational and cultural activities only.
Under the new agreement, the above has expanded in favour of the GOSL to include healthcare and hospitals and exhibition and convention centres and the new Colombo International Financial Centre. Also no restrictions will be placed on developing the North and West ports of the Colombo Harbour. In addition, the project company has agreed to setting up the CIFC building in the land area reclaimed first including making a new investment in the CIFC building no sooner it is technically feasible to build on reclaimed land and upon mutually acceptable terms being agreed with the GOSL after a feasibility study.

Environmental conditions
Under the original environmental impact assessment study carried out in 2011, 42 conditions were imposed by the Department of Coast Conservation in its development permit. Under the new Supplementary Environmental Impact Assessment carried out by the Ministry of Megapolis for 269 hectares of reclaimed land and made available for public comments in December 2015, the new development permit issued by the Department of Coast Conservation includes 70 conditions to mitigate the impact on the environment.

Change of status
The previous administration had this as a Land Reclamation Project to utilize this initially for real estate, sports, education and cultural development including night racing tracks etc. Therefore, the bulk of the land was not available for real estate development by the government.

Now it has been agreed with the Chinese Government that this land is being used to build a Financial City to fill the vacuum between Singapore and Dubai. This will enable offshore operations. For this purpose, the government will propose new laws for governing offshore activities like in Dubai.
(Compiled by Azhar Razak) | Pic by Chandana Wijesinghe