Mega investment zone in Colombo

A new mega investment zone – slightly bigger in size than Male which is 1.77 sq km or 437.3 acres – is coming up on the fringes of the Colombo harbour with developer John Keells Holdings (JKH) preparing the formalities to sign the relevant agreements with the authorities.

Under a public-private partnership, JKH will reclaim and develop 459 acres of land adjacent to the proposed Colombo South Harbour, a top JKH official said. “The project is moving forward in terms of documentation in the form of various approval processes. We hope to get the approvals in place and sign the formal agreements within the course of this year,” Ajith Gunawardena, Deputy Chairman JKH told The Sunday Times FT.

The project will reclaim the area adjacent to the new Colombo South Harbour breakwater to create what has been described as a ‘purpose built port city’. This city will have a defined Special Economic Zone catering exclusively to global and regional players in the financial services industry, and in a smaller part, some still-to-be decided projects.

In March 2007, JKH made an announcement confirming that the Cabinet Sub-committee on Investment Facilitation (CSIF) has approved the issuance of a Letter of Intent (LOI) in favour of JKH with regard to a proposal submitted to the government by the company. “The particular land reclamation project is estimated at US$ 300 - 400 million and is envisaged as a public private partnership (PPP) project,” Gunawardena explained. The project is a joint venture between JKH and the Sri Lanka Ports Authority (SLPA), with each taking a 45 percent stake while the balance 10 percent is to be contributed by an institutional investor such as a multilateral lender or a global infrastructure fund.

Gunawardena said the government is very positive to get the project up and running and is working on various legal documentation. “These things do not happen overnight, but we have 10 months for this year to get the approval. We are positive to set the process in motion this year,” he stressed.

A stock market analyst said JKH has a strong balance sheet to start such a project but doesn’t have the technical strength to do it on their own. “It is a project with a long gestation period, which is also the largest ever capital expenditure project which will go on for many years,” he said.

JKH is also embarking on hotel expansions in India – China and the Middle East this year. JKH has invested US$ 65 million in the Maldives during the last three years.The company posted a third quarter net profit of Rs.1.35 million, up 99 percent from last years corresponding period.