Packer’s $ 350 m project gets 50-year land lease for Rs. 2.8 b

Friday, 21 June 2013 03:41 -     - {{hitsCtrl.values.hits}}

By Uditha Jayasinghe As the war of words heated up between the Government and the main Opposition over the controversial James Packer project, Cabinet on Wednesday approved a 50-year lease on the land earmarked for it at a cost of Rs. 2.78 billion. Rank Holdings, the local partners of the US$ 350 million James Packer venture, has obtained a land under a new company titled Lake Leisure Holdings. According to documents obtained by the Daily FT on 12 August 2009, a Cabinet paper was approved to provide the 2.5 acre land opposite Lake House in Fort to Rank Car Park Lanka Ltd., for a multi-storeyed car park complex with a multi-storeyed commercial building. This was a result of a decision made by a Cabinet Sub Committee on Investment Facil-itation that had met on 9 March 2007. At this meeting even though the Urban Development Authority had agreed to allocate the land to Rank Holdings for 50 years the subsequent Cabinet meeting in 12 August 2009 reduced the term to 30 years. At the time the Government Valuer had decided that the lease premium for 30 years should be Rs. 1.3 billion and Rank Holdings had paid 10% of this value amounting to Rs. 130 million to the UDA as part payment. However, Rank Holdings had later requested that the lease be extended to 99 years for a mega-scale mixed development project that would include three basement car parks and 30 floors for residential apartments. Nonetheless after a series of discussions with the UDA a lease of 50 years was agreed on for a value of Rs. 2785 million as determined by the Government Chief Valuer on 13 September 2011. This decision was followed by another payment of Rs. 100 million to the UDA as part payment for the lease. “However, the proposal made by the developer to construct multi-storeyed car park with some commercial use was found not to be feasible. Therefore, on the direction of the UDA, Rank Car Park Lanka Ltd. agreed to implement a mixed development project compatible with the ongoing tourism related development plan of UDA for Beira Lake surrounding. The developer has decided to amend their plans and incorporate a new company named Lake Leisure Holdings to implement the new project proposal,” the Cabinet paper stated. Accordingly, the UDA entered into a MoU on 25 March 2013 with Rank Holdings and Lake Leisure to implement the venture. It was subsequently recommended as an “unsolicited project proposal” by the Standing Cabinet Appointed Review Committee. The Government announcement on this Cabinet decision said: “Lease of land situated bordering D.R. Wijewardena Mawatha and Sir Chiththampalam A. Gardiner Mawatha, Colombo 02 to M/s Lake Leisure Holdings (Pvt) Ltd. for a mixed development project – the proposal made by the President, in his capacity as the Minister of Defence and Urban Development, to lease out the above land to implement a mixed development project in keeping with the ongoing tourism related development plan of the Urban Development Authority (UDA) for Beira Lake surrounding areas, as recommended by the Standing Cabinet Appointed Review Committee (SCARC), was approved by the Cabinet.” Cabinet Spokesman Keheliya Rambukwella defended the Government stance on casinos by reiterating that new gaming licenses would not be renewed but revealed that an idea to bring all casinos in Sri Lanka into one zone had been mooted. “Right now casinos operate around the country and there has been an idea brought forward that all these should be brought together in one place. Of course it will be a very small area of maybe two kilometres, but we are considering it,” he said.