* CATIC complains of step-motherly treatment, Treasury to refund US$ 54.4mn advance
* Kriish has July 15 dead-line to close deal for US$ 460mn project
By Mario Andree
After the government attracted US$ 500 million from Hong Kong based Shangri-La to develop the country’s first ever seven star hotel in Colombo, the Board of Investment is in the process of finalizing a US$ 640 million mixed-development project in the heart of the country’s commercial capital.
Minister of Investment Promotion Lakshaman Yapa Abeywardena said that after successfully streamlining the approval process, the BOI had attracted a major investor who would develop 17 acres in Colombo, however the minister did not divulge who the investor was due to an agreement with the company but Reuters reported that investor was top blue-chip John Keells Holdings PLC.
He said by next week the BOI would finalize the approvals for the US$ 640 million project and said he would officially announce the developer.
The 17 acres situated in Colombo has been agreed to be leased on a 99 year contract at Rs. 7 million a perch.
Sri Lanka’s top conglomerate, John Keells Holdings will sign a $640 million deal to establish an integrated hotel complex in the capital of Colombo, Reuters reported. "Keells, the heavyweight of the $18.5 billion Colombo Stock Exchange CSE with a $1.77 billion market cap, will sign the deal with a company from outside the country. This will be the biggest deal by a local company. John Keells will bring $640 million as foreign direct investment. The deal will be signed next week, Reuters reported quoting unnamed sources close to the deal.
After the government sold Hong Kong based Shangri-La 10 acres of prime land outright in Colombo for US$ 125 million to develop a mixed-development project, China’s China National Aero-Technology Import and Export Corporation (CATIC) entered into a deal to purchase 10 acres adjoining the same land which the government planned to offer outright at US$ 132 million.
Due to an unexpected policy decision by the government not to sell land to foreign investors, after outcries from the opposition, the CATIC project was put on hold for a while and the 10 acre land was offered to international hotel operators Sheraton instead.
Abeywardena yesterday said that CATIC refused the offer to obtain land on a 99 year lease and had queried as to why Shangri-La was allowed to purchase land outright and not CATIC.
The government had decided to refund the advance paid by CATIC amounting to US$ 54.4 million for the 10 acres facing the Galle Face. Abeywardena was not sure whether or not the refund was made.
The government leased another prime land for a major development project to the Krissh Group, the company has paid 84 percent of the land value and has been granted until July 15 to pay the rest after resolving the land issues which occurred three months ago.
Abeywardena said that the government charged 12 percent interest on the late payment and would charge for the next month as well, the Cabinet papers would only be submitted after the company pays in full.