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Horana tyre factory: Legal tangle over land ownership
View(s):By Namini Wijedasa
A land transaction between the Board of Investment (BOI) and controversial businessman Nandana Lokuwithana has become more complicated. Mr. Lokuwithana’s Rigid Tyre Corporation (Pvt) Ltd is tipped to receive 100 acres of land from the gazetted BOI industrial zone at Wagawatta in Horana. The deal was negotiated by the Development Strategies Ministry which proposed a 99-year lease to Rigid Tyre at well below the BOI’s base price for lands in that area.
But the Land Reform Commission (LRC) has now claimed ownership to the property and there are concerns that the BOI may not even be authorised to lease it out to Rigid Tyre. The LRC has already conveyed this to the relevant authorities. “We made our submission with regard to the ownership of the land last week,” its legal officer said. The LRC is reported to have transferred the property to the Janatha Estates Development Board (JEDB) which then handed it over to the BOI. The terms of those agreements were not immediately clear and are now being delved into by lawyers, said LRC Chairman Sumanatissa Thambugala.
Meanwhile, the Development Strategies Ministry has asked President Maithripala Sirisena to delist the 100 acres in Wagawatta from the BOI’s list of gazetted industrial zones. This would allow the ministryto grant the land to Mr. Lokuwithana at the rates the Ministry has agreed to, overriding BOI objections.
The President has expressed concern about the deal. It is not known whether he will agree to such a delisting; or whether it can be done in view of new snags related to land ownership. “It is technically not possible to transfer the property to the company without first sorting out who it belongs to,” legal sources said, requesting anonymity.
The BOI this week sought the Attorney General’s advice on the ownership tangle. The investment agency had leased out lands in Wagawatta to other investors before Mr. Lokuwithana made a pitch for a plot.
The foundation stone for the tyre factory was laid on January 5. Its management started clearing the land soon after, even before the lease agreement with the BOI was signed. In late January, President Sirisena ordered work to be stopped till the terms of the proposed deal were re-examined. He also sent a note to the Cabinet Committee on Economic Management warning about the loss to the BOI and highlighting the need for a level playing field for all investors.
Mr. Lokuwithana has pledged an investment of US$75 million or Rs. 11.2 billion and employment for between 1,000 and 3,000 people. His company is also to receive a 12-year tax holiday, approval to release 40 percent of production to the local market and a nominal annual rental for the plot.