The Sri Lankan government may issue fresh bids for Kalpitiya Integrated Tourism Resort Project (KITRP) in the hope of attracting meaty investors, as they are ‘not too happy with those who have been chosen’ to develop 10 islands in Kalpitiya in the Puttalam District, according to government sources.
“There are about 11 investors who applied to invest around US$ 500 million to put up tourist resorts, golf courses, marinas, etc in this zone which was defined as a tourist zone by the Sri Lanka Tourism Authority, but the government is not happy with the bids which have mainly come from Indian parties,” one source told the Business Times.
He said that parties such as Integrated Resorts Ltd, Sunmarina Resorts Ltd and Taprospa Resort are some of the entities that have applied for KITRP but didn’t say from where they are. “There are some local players as well, but they are also not ‘big’ names,” he said, adding that none of the big local conglomerates has applied. He said that one firm has sent the highest bid for as much as US$ 270 million, but declined to comment whether it’s Indian or a local entity.
He added that there were no bids from any western chains. However, sources close to the short-listing process of the bidders say that there’s something dubious going on. “There’s a party which has applied for sending in a bid for US$ 270 million. That is a substantial sum for these islands,” a source from the industry told the Business Times, adding that the industry is raising issues.
He added that this particular party that has applied is a consortium and strong international chains such as Grand Hyatt, Holiday Inn, MGM and Marriott have granted it ‘comfort letters’ (in the bid). ‘Comfort letter’ is a process where one backs the financial soundness of a company.
The source said the industry senses some foul play where ultimately an unsolicited bid (companies that have not sent a bid) may be entertained.
But the government sources flatly denied this saying that the entire bidding process and the progression thereafter have been transparent.
The islands which are to be leased for 30 years to the investors comprise of a marine sanctuary with a diversity of habitats ranging from bar reefs, flat coastal plains, saltpans, mangroves swamps, salt marshes and vast sand dune beaches.
There are 17 islands in the Kalpitiya area and work has already begun on tourist resorts on two of them by an Indian and a Maldivian firm. Last July SLTPB said that Qube Lanka Leisure, an Indian firm, is to build 200 beach villas worth US$ 16.8 million and Sun Resorts, a Maldivian firm, is to invest some US$ 1.2 billion to build 150 water bungalows in two islands.
Luxury accommodation units to attract up-market tourists, hotels, chalets, water bungalows, Aurvedic hotels, beach cabanas, sun huts, out door barbeque pits, open air performance areas, low cost accommodation units for budget travelers, domestic airport and travels, theme/amusement parks, underwater amusement park, cable car tours, high speed boat, safaris, water sports, 18 hole golf course, observation towers, etc are on the cards for the islands.