Colombo Port City Construction Delays Cause Heavy Losses for State
- CNL Reporter
- March 7, 2025
- Constructions
- NEWS OF THE DAY
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NEWS OF THE DAY
The Colombo Port City construction delays due to successive governments’ ad hoc decisions of suspending the ongoing work from time to time have caused a loss of millions of dollars for the state, national audit office revealed.
These delays have had implications for the project’s timeline, investor confidence, and Sri Lanka’s diplomatic relations, particularly with China, several foreign and current affairs analysts claimed.
The mega development project project, which is a 100 privately funded foreign direct investment of US $1.4 billion by the China Harbour Engineering Company (CHEC) , the primary developer began construction following the signing of an Agreement with the Government of Sri Lanka on September16 2014.
But all construction work has stopped following the Sri Lankan Government’s official communication on March 06 2015 issued by the Secretary to the Ministry of Ports, Shipping & Aviation, communicating the decision by the Cabinet Ministers to temporarily suspend ongoing work of the Project, with immediate effect.
As a result of this suspension, CCCC estimated an initial direct loss for the company of over $380,000 per day. Further the interest on the financial loan obtained by the company for the development of the project is being paid, regardless of the ongoing suspension.
The company responsible for the project had demanded a compensation amounting to US $ 143 million, auditor general’s recent report revealed adding that a land of high commercial value had been released to the company in exchange for the compensation.
THE CCCC has dropped its claim against the Sri Lankan government for $143 million in compensation for delaying the $1.4 billion Colombo Port City development, in return for getting additional land for the project
The assessment value of this land had not been reported thus causing a loss to the Government, the audit inspection observed.
Over 200 meters of the breakwater constructed thus far, has been damaged due to the suspension, as the company is unable to take measures to protect the reclaimed land due to the suspension.
The reconstruction of this damaged land has caused an additional cost to the company while a sum of Rs. 1,000 million had been estimated for a temporary solution until a permanent solution is put in place for the management of sewage system of the Port City.
However, the estimated amount had increased to Rs. 3,700 million due to changes in the plan and increase in prices, audit report highlighted.
This work should have been completed in the year 2019 in accordance with the tripartite agreement for the Colombo Port Expansion Project, but the project had been resumed in December 2022.
It had not been completed even by September 31 2023 even though a sum of Rs. 1,600 million had been spent during the period 2017-2019.
The south sewage system planned to be completed in 07 stages, should have been completed by 11 July 2023, but 03 stages remained in planning phase even by September 30 2023 audit report observed.
