Revised Galle Face deal offered to Chinese firm

Outright purchase changed to 99-year lease, but questions over CATIC’s acceptance

The Cabinet has now given approval for a 99-year lease of seven acres of prime land near Galle Face Green to China National Aero Technology and Export Corporation (CATIC). This is after reversing an earlier decision for the outright sale of the land for around US dollars 125 million (or about Rs 13.7 billion). It is not immediately clear whether CATIC — China’s aircraft manufacturing and marketing firm — would accept the offer or demand that its money be refunded. CATIC is learnt to have already remitted to the Treasury the amount involved.

The latest approval came after Economic Development Minister Basil Rajapaksa forwarded a revised Cabinet paper on a directive issued by President Mahinda Rajapaksa. In his earlier Cabinet paper, approved and later rescinded, Minister Rajapaksa told ministers of CATIC’s intention to “purchase seven or more acres of land for a flagship investment project, from and out of the area in which currently the Army Headquarters is situated at Galle Road.” This is adjoining the ten acres of land already assigned for Shangri-La Hotels (Private) Limited for a “multi-functional complex comprising a five - star hotel and a shopping mall.”

According to Minister Rajapaksa,“CATIC is a large conglomerate operating in China and owns 11 grand hotels and 56 hypermarkets. It is already engaged in several development projects in Sri Lanka, through projects funded under the credit facilities mobilised from the Exim Bank of China.” He has said that this is the first time that CATIC has come for “a direct investment from and out of their own resources.”

When CATIC made the offer, it had said it would want to purchase the seven acres of land at the same unit price as offered to Shangri La Hotels. Such a purchase by CATIC was to be made under the name of “Asia Prospects International Limited” (APIL), a company wholly owned by CATIC and registered in Hong Kong.

Although there will be no change in the land sold outright to Shangri La Hotels, President Rajapaksa has decided that all land allotment for foreign-funded projects would be on a 99 year lease.

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