by Rajan Philips Courtesy Island

With due apologies for dredging up Port City material on the last hangover day after the festival season, I think it is appropriate to raise the issue that to-date the Sirisena-Wickremesinghe government has not made a formal statement telling the people the whole truth and nothing but the truth about the Port City project. I would suggest that such a statement must come from President Sirisena as a statement in parliament, and that it should be followed by a parliamentary debate, no matter what such a debate might be worth. The President owes it to the people to tell them through the parliament they elected the truth about the following: what are the specific mistakes, improprieties and shortcomings, if any, in the approvals granted and agreements signed by the Rajapaksa government; and how and to what extent are these mistakes, improprieties and shortcomings being addressed in the approvals that are about to be given and new agreements that will be signed by the present government.

Why the President? There are at least four reasons why it is the President who must provide these explanations to the people on his own behalf, and on behalf of the government. First, the Port City project process under the Rajapaksas was vigorously criticized by the common opposition forces during last January’s presidential election campaign, and as the man who defeated Mahinda Rajapaksa, Maithripala Sirisena has an obligation to tell the people how and why the project approvals that will be given by the R-W government are different from those given by his predecessor. Second, the legal process for land reclamation and development starts with the President as it is the President who will authorize the recognition of the reclaimed land under the Lands Ordinance. Third, the President is also the Minister of the Environment and it is he and no other Minister who should authorize project approvals upon confirmation that the project has met all the environmental assessment requirements. Fourth, although he has since fallen quite a distance from the impressive standards for personal and political conduct he set during his first six months in office, President Sirisena is still the only person in the government who is at least conscientious about the commitments the common opposition made to the people in January 2015. Although no longer untarnished, President Sirisena has the greatest credibility to speak the truth on the Port City matter.

 

I would hope that there will be other voices of pleas, persuasion and of course pressurizing to make the President come clean with the people. While the so called Supplementary EIA is in the public domain to meet the mandatory review requirements, there are still lacks of clarity and unanswered questions about practically every aspect of the project. In what follows, I have tried to categorize and summarize them under five broad headings to facilitate continuing public discussion and to elicit explanations from the country’s highest elected official.

 

1. The Agreement

 

It has frequently been said, mostly in newspaper editorial comments, that although they campaigned against and suspended (on March 6, 2015) the Port City project, the present government leaders cannot afford the consequences of dishonouring the agreement that the previous government signed with the China Harbour Engineering Company Limited. If that is the case, why hasn’t anyone in the government come out and say just that – that they are stuck with an agreement that the previous government signed even though they don’t like it at all? It would be equally important for the government to clarify what aspects of the original agreement are detrimental to national interests, what changes are being proposed by the present government, and how the proposed changes will address the earlier shortcomings. In a parliamentary statement, President Sirisena could address all issues pertaining to the agreement signed by the former government. Some of the other key disconcerting aspects of the project are noted below.

 

2. How much land?

 

The initial application by the developer was apparently for developing 120 ha (300 acres) of reclaimed land. The developer, reportedly, nearly doubled the land component to 233 ha (580 acres)? Was this expanded limit part of the old agreement? The latest reports indicate a developable area of 266 ha (665 acres). The overall footprint of the proposed reclamation would be much larger – 480 ha (1,200 acres). The additional land, 80% increase, is said to be reserved for beaches and watercourses?

 

It is fair to expect the President to tell the people how much land is proposed to be reclaimed. As well, how could an 80% increase in reclamation be justified to accommodate beaches and watercourses, especially considering the monetary and non-monetary costs of reclamation, as noted below (#3)? Also as noted below (#4), what are the development rights and risks associated with the Port City project?

 

3. Reclamation

 

Perhaps the gravest of all project issues involves the process of reclamation. There are engineering, environmental, economic, and social questions that have been raised, but have not been answered to-date. Among the main questions are:

 

a) Modelling studies have apparently indicated that there would be no significant coastal erosion or accretion effects owing to land reclamation. Have similar studies been undertaken in regard to using the western coastline between Hendala and Basiyawatta as the source of sand mining for Port City reclamation?

 

b) It would seem the use of the Hendala-Basiyawatta coastline for sand mining should be subjected to a separate Environmental Assessment – to identify alternative sources of sand and select the one that will have the least social, environmental and economic impacts.

 

c) Was deep sea dredging considered as an alternative source for sand? Deep sea dredging might be costlier to the developer, but it will spare the livelihoods of fishing communities and the health of the coastal environment from Hendela to Basiyawatta.

 

d) The Supplementary EIA is of little help in recommending that government agencies must obtain the “buy-in” of impacted fishing communities, and that the latter should be “educated” about the measures that will be taken to compensate them. There is mention of income and benefit programs targeting the impacted fishing communities. Who will be paying for these programs – the developer, or the government of Sri Lanka?

 

e) Already the government is said to be offering sand free of charge to the developer, potentially losing a market value of US$ 1.7 billion, higher than the developer’s $1.4 billion ‘investment’ in reclaiming land. Will the President ask his Ministers to explain to him the madness behind this generosity before he explains it to the people?

 

4. Development Rights and Risks

 

 

 

* Developer’s portion given on 99 year lease (with no freehold):108 ha (270 acres, 41%)

* Government’s portion for marketing & development: 62 ha (155 acres, 23%)

* Common Area portion (for roads, parks and amenities): 96 ha (240 acres, 36%)

 

The reclamation is only the foundation for the glittering towers of the Port City that are expected to come later. The reclaimed developable land is to be sub-divided as follows:

 

Much is being made of the developer’s munificence in keeping for himself only about 41% of the developable land while offering another 36% for common usage, not to mention the 23% of land left for the government to sell or develop. Even the SEIA harps on these so called positives instead of raising some hard questions as part of project review, such as:

 

a) The full development of the Port City is expected take place over 25 years. While the timeframe is understandable, the long interval also creates risks and uncertainties about expected development actually materializing. Have market studies been undertaken to ascertain regional and global market trends and to identify potential developers of different land uses envisaged for the Port City? Usually, it is the initial developer’s responsibility to undertake such studies to establish market potential before concept planning and environmental assessments are initiated.

 

b) While there is identification of permissible land uses, there appears to have been no reports regarding anticipated development yields – in terms of floor areas and residential unit numbers. As well, Port City development yields will have to be assessed together with development yields in the rest of Colombo and the Western Province as part of Megapolis initiative.

 

c) Even with market studies, there is no guarantee against local and global property market collapses. Property market volatility has become a fact of global economic life over the last few decades. In the 1990s, the celebrated Canary Wharf development in east London’s old dockyard lands ran into heavy market weather at the start, with the initial developer (Olympia and York of Canada) going bankrupt after completing the first of the Canary Wharf towers, which is the second tallest building in England. It took another five to ten years and the extension of London’s Jubilee Underground line at a cost of US$5.25 billion, to rescue and restart the development process.

 

d) Can Sri Lanka withstand property market busts, now globalized after triggering the financial meltdown in the last decade, and survive the costs of maintaining the reclaimed land if full development and returns are not achieved within the 25-year horizon?

 

e) Who would be responsible for building and maintaining the 96 ha common area – comprised of roads, parks and amenities? The developer or the government of Sri Lanka?

 

f) Will there be property tax revenue from Port City development to government finances? Or, the 62 ha of land is all that the government will get in the end to recuperate its considerable costs?

 

5. Infrastructure Impacts

 

It has been acknowledged that no infrastructure studies have so far been undertaken for the proposed Port City development. It is not at all prudent to embark on such a massive undertaking without basic technical studies assessing the impacts on and the expansion requirements for water supply and sanitary servicing infrastructure, transport infrastructure, electric power supply and solid waste management. It is hoped that the new infrastructure within the Port City limits will be paid entirely, as it should be by the developer. In addition, the developer should also contribute to the infrastructure capacity expansions in the existing water supply, sanitary, transport and power systems in Colombo and the Western Province, which will be required to accommodate the demands of the new Port City.

 

These obligations must be conditions of development approval and part of the agreements that the government is expected to shortly enter into with Chinese agencies. Without them, the Sri Lankan government (and the people) will be on the hook to pay for infrastructure to get development going. Already, the Sri Lankan government is entering into an agreement for a soft Japanese loan for providing underground power network to service Colombo and the Port City. Interestingly, the news about the government’s loan agreement with Japan was revealed to the media in a statement issued by the China Harbour Engineering Company Limited, the Port City developer. One might ask who is on the saddle, and running Colombo.

 

For the Canary Wharf development, the initial developer was under agreement to pay 20% ($600 million) of the original estimated cost ($3 billion) of extending the Jubilee Underground line. With cost overruns, the final project cost ballooned to $5.25 billion, while the developer contribution dropped to $260 million (a low 5%). London, being London, survived these costs and Canary Wharf is now a successful development. The success is mostly the result of London’s huge infrastructure complement, and London also has well-established regulatory mechanisms. The development is hugely served by the London bus system, its rapid (Underground), and the national rail transport, as well as the use of river navigation for freight transport. There is strong emphasis on cycling and walking and de-emphasis of private car usage – through restricted parking supply, high proportion of public housing and low levels of car ownership among the people who live and/or work in the Canary Wharf developments. Colombo is not London, and embarking on massive developments without proper planning and supporting infrastructure will have its consequences, short-term and long-term.

 

A more immediate consequence is in regard to drainage. There have been reports that the ongoing reclamation work might block the existing Beira Lake drainage outlet. One can only hope that such conflicts will be identified and avoided through proper agency co-ordination and scrutiny. Unlike in other areas, sloppiness on drainage infrastructure will have immediate consequences. Colombo would become a permanent “mega-flood-polis” even before Port City rises above sea level.

 

Who does what on Port City?

 

Lastly, the President must clarify the roles and functions of the different agencies involved in the project. A plethora of agencies are playing the roles of proponents, reviewers, and/or approvers. There is too much overlapping and conflict, and even confusion. A streamlined multi-agency organization is needed, along with the creation of a Port City Authority to oversee the implementation of the project over the long term. Before that the government must satisfy itself that all the questions about Port City have been asked and answered, intelligently and honestly. And the President must assure the people that he is satisfied as well.