Harsha raises fresh poser on Krrish deal

Monday, 17 December 2012 00:00 - - {{hitsCtrl.values.hits}}

UNP MP Dr. Harsha de Silva yesterday raised a fresh poser on Krrish Group’s mega project, asking if the Indian firm would pay the $ 500 million by 31 December 2012 as per the revised agreement, adding that if not the Government should cancel the lease.

It was recently revealed in Parliament that the Government had entered into an agreement with a relatively unknown entity called Krrish Group of India to lease out the four-acre prime Transworks Square property for a period of 99 years for US$ 450 million or approximately Rs. 59 billion for a commercial development. According to a statement made by the Leader of the Opposition Ranil Wickremesinghe in Parliament in early November, even though Krrish Group was to have made a 20% down payment of the total sum within seven days of establishing the company in Sri Lanka and the remaining 80% on signing the lease agreement, these monies had not been deposited in any bank account of the Government.

In response to this statement, the Government announced that the agreement had been revised and that 10% had been paid on 14 September and that the remaining 90% would be paid within two weeks of signing the agreement on 15 December 2012.

In the meantime, the Government by Extraordinary Gazette 1778/3 dated 1 October 2012 notified that this project had been identified as a strategic development project and approved a large number of benefits including 25-year tax breaks on income, on dividends to shareholders, and on PAYE by employees. Furthermore, it provided exemptions on withholding tax, VAT and PAL, and also from Customs duty.

Amidst allegations that the controversial Krrish Group had not yet completed a single such development project anywhere else in the world and that the project had been handed over to them on a non-transparent basis, the UNP MP observed that the company was advertising heavily to pre-sell apartments in the proposed three 90-storey towers at approximately Rs. 90 million per unit in order to raise funds locally for the lease payment as opposed to bringing the funds in as Foreign Direct Investment.

However, Janaki Siriwardhana, a Director of Krrish Group Sri Lanka, had announced recently that her company would invest over US$ 1,400 million (Rs. 182 billion), besides the US$ 450 million, in the next three to five years, including in a seven-star hotel they are negotiating to build and operate with the Ritz Carlton.

The UNP MP noted with increasing concern that no announcement has been made by the Government that it signed the lease agreement on 15 December and is expecting the full payment of US$ 450 million by 31 December as announced in Parliament on 24 November.

“We hope this agreement was signed and the Government will make the announcement today. However, if Krrish Group is either unable or unwilling to meet the conditions of the revised agreement, the Government must take immediate steps to cancel this agreement on underperformance as per the expropriation legislation enacted last year that was selectively applied only on certain identified investors,” UNP MP Dr. de Silva said.