Fortune 500 Chinese firm corrects UNP on allegations over $ 1.4 b port city project
Monday, 24 February 2014 00:01
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Fortune 500 and Hong Kong listed Chinese giant China Communications Construction Company Ltd., (CCCC) yesterday in a statement set the record straight about its $ 1.4 billion investment in to the planned Port City project.
This is following a range of allegations levelled by UNP Leader Ranil Wickremesinghe as well as UNP MP and spokesman on the economy Dr. Harsha de Silva in recent weeks.
Biggest FDI ever
The $ 1.4 b project will develop 233 hectares of land by reclamation.
The investment is fully funded by equity from CCCC and funds raised by CCCC, with no funding from the Government of Sri Lanka or any Government guarantee.
125 hectares of this development will belong to the Government from the date of project completion.
A further 88 hectares will be owned by the Government, but leased to the CCCC on a 99-year lease as part consideration for its investment.
The balance 20 hectares of this development will be given to CCCC on a free hold basis as a return on their investment.
The statement said that the China Communications Construction Company Ltd. (CCCC) is a listed company in the Hong Kong Stock Exchange (HKEX) and Shanghai Stock Exchange (SSE), and a Fortune 500 company, ranking top in ENR’s Top 225 international contractors for years. The majority shareholder is the Government of China.
In 2005, CCCC was incorporated as a holding company under which China Harbour Engineering Company group (CHEC), established in 1980, was brought under. The Colombo Port City Project comes under the holding company CCCC and the implementation comes under the CHEC.
Another company, China Road & Bridge Company group (CRBC), established in 1979 was also brought under CCCC in 2005. Prior to becoming a subsidiary of CCCC, in 2002, the CRBC was invited to bid for the Philippines National Road Improvement and Management project. During the course of bidding for this project, the World Bank unilaterally announced sanctions on CRBC. This decision is being disputed by CCCC and a clarification announcement to the HKEX was issued in January 2009
Subsequently, under the World Bank sanctions regime which ensures that successor organisations – through purchase or reorganisation – will be subject to the same sanctions applied to the original firm, in July 2011, the World Bank announced that the sanctions imposed on CRBC in connection with the said Philippines National Road Improvement and Management project in 2002 would apply to CCCC as well.
An appeal was also submitted to the World Bank.
CHEC has been partnering Sri Lanka in major development projects for the past 15 years even before the company became a subsidiary of CCCC. One of the most significant projects is the country’s first major highway, the Colombo-Matara expressway.
CHEC believes that Sri Lanka has great potential to become a regional business centre for South Asia and continue to partner in mega development projects such as the Colombo Port City.
Unlike previous projects undertaken by CHEC in Sri Lanka, this newest investment is fully funded by equity from CCCC and funds raised by CCCC, with no funding from the Government of Sri Lanka or any Government guarantee.
This is the single biggest FDI to date for Sri Lanka valued at US$ 1.4 billion, with a development of 233 hectares of land by reclamation. 125 hectares of this development will belong to the Government from the date of project completion.
A further 88 hectares will be owned by the Government, but leased to the CCCC on a 99-year lease as part consideration for its investment.
The balance 20 hectares of this development will be given to CCCC on a free‐hold basis as a return on their investment.
The manner in which the various articles in the Sri Lankan newspapers reflected the calculation of the price of land is not based on any sound formula.
Similar projects closer to home, such as Singapore and Dubai have demonstrated that land values have appreciated across these cities as development has improved lifestyles and we are confident of a similar scenario for Colombo with the development of the Port city.
Being a Fortune 500 company, CCCC focuses on strict compliant management systems and has always maintained close working relationships with governments, international organisations, banks and corporations.
CCCC’s business has already stepped into six continents and its overseas contract amount has reached US$ 20 billion. We believe the Colombo Port City project will spearhead further economic development in the city and position Colombo as the International Business Centre of South Asia, creating employment, increase tourism, and attract the international high‐end experts, import the advanced technology, and strengthen the international competition of Sri Lanka.
Finally, there is no sound basis for direct and/or indirect allegations made that Chinese companies in particular CCCC or CHEC may engage in corrupt practices. Specific legislative initiatives have been taken in China to leave no room for corrupt practices by Chinese companies.
For example, the Eighth Amendment to the Criminal Law of the People’s Republic of China which came into force on 1 May 2011 specifically tackles this issue and makes it a crime to make payments to non‐PRC Government officials and to officials of international public organisations for any illegitimate commercial benefit.
