Port City will not be downsized

The size of the Port City Project will not be reduced as environmental concerns have been addressed and will continue as a joint venture between the Chinese company and the Government, the International Trade Ministry said yesterday.

Following discussions in Beijing and Colombo, the Government of Sri Lanka (GoSL) and China Harbour Engineering Co Ltd. (CHEC) have agreed to recommence the Port City Project, the statement noted.

Fishing communities and environmental organisations had protested the largest FDI in the history of Sri Lanka on the grounds it would devastate the coastline and affect fishing grounds.

The Project will now be taken forward by a joint venture company to be established between the GoSL and CHEC. The reclaimed land will be vested in the joint venture company on a 99-year lease. There will be no free hold land, it added.

“It was also agreed to proceed on the basis of the current Agreement, which is based on 233 hectares of reclaimed land. The Supplementary Environmental Impact Assessment, which has now been completed, was based on 269 hectares. Any technical issue arising from this will be resolved in the future by the joint venture company and the relevant government authorities,” the Ministry headed by Malik Samarawickrama assured.

The current Agreement expires on 15 March 2016. A decision has, therefore, been taken to extend it by a further six months pending the formation of the joint venture company and the signing of a new Agreement.

Cabinet on Wednesday approved the recommencement of the Chinese-funded $ 1.4 billion Port City project.

The Port City, which ran into trouble last year when the new Government came into power, is expected to recommence this month after several amendments are made to the original agreement, according to International Trade and Strategic Development Minister Malik Samarawickrama.

Samarawickrama, fresh from a visit to China earlier this month, had extensive talks with officials in Beijing regarding investment in Sri Lanka, with the recommencement of the Port City at the core of stronger relations. Cabinet approval of the project comes weeks ahead of a planned China visit by Wickremesinghe on 6 April.

The Cabinet Committee on Economic Management headed by Wickremesinghe also recommended allowing resumption of the project subject to limitations and conditions stipulated in the EIA report, the Government said in a statement.

At the same Cabinet meeting the green light was given to Ports Minister Arjuna Ranatunga to release compensation to owners of land acquired for the second phase of the Hambantota Port. Phase II of the port is estimated to cost $ 810 m. Samarawickrama on Wednesday told a business conclave for foreign investors organised by the Ceylon Chamber of Commerce that the Sri Lankan Government plans to hand over operations of both the port and the Mattala Airport to China and establish a 1,000 acre investment zone nearby.

Local subsidiary China Harbour Engineering Company (CHEC) Port City Colombo Ltd., of parent company China Communications Construction Co Ltd. (CCCC), built the Hambantota Port and the Suriyawewa Cricket Stadium. It then signed the Port City original deal under the previous Government headed by former President Mahinda Rajapaksa and the project was flagged off by Chinese President Xi Jinping during his visit to Sri Lanka in September 2014.

CCCC had earlier estimated when the project was suspended in March 2015 that the shutdown would result in losses of more than $380,000 a day and sought permission from the Government to build a protective breakwater to maintain the already-reclaimed land.