Controversial High Speed Railway Project on hold due to lack of clarity
The controversial High Speed Railway Project by Ceylon High Speed Railways Ltd with four foreign investment and technology partners and a massive working capital of Euro 2.2 billion has been put on hold due to its complexity and lack of required information, Board of Investment (BOI) officials said.
The local company has informed the BOI that ITAL certifier, GHH-Bonatrans, Germany, Marchagalia SPA Italy and ZF Freidrichshafen AG, Germany will be its investment and technology partners.
According to the project proposal, the company intends to set up a high speed train manufacturing plant in Sri Lanka including seven final assembly plants and 34 factories to produce sub –systems for the final assembly line.
All parts and components are to be produced in Sri Lanka and completed trains will be exported to foreign customers, the project report revealed.
The initial phase investment will be in the region of Euro 4,888 million on capital goods over a period of eight years.
The company planned to provide employment for 24,860 with 2400 foreign employees and the project is to be implemented over a 12-year period.
It has requested 2,242 acres of state land for outright purchase in Karuwalagaswewa, Muthurajawela and in Horana along with 1,823 acres of private land in Karuwalagaswewa, Tanamalwila, Bandagiriya and Ranna in Hambantota.
The company has also requested the government to declare the total land area of 4,065 as licenced zones under section 22 of BOI Law.
They have sought the permission of the government to operate a private bank, set up a private university, and bring down capital goods including 220 prime movers, 40 excavators and two ships, 4 helicopters 10,000 mobile phones free of custom duties and all other charges.
The Single Window Investment Approval Committee (SWIAC) has directed the company to submit letters of intent of the foreign investors and other details of the project.
The SWIAC which is entrusted with the task of appraising the viability of complex investment projects has deferred this project as the investor had submitted incomplete information; BOI Director General Duminda Ariyasinghe told a media conference in Colombo on Friday.
The project has not been rejected, but the investor needs to provide the necessary information requested by the Committee so that it could be considered for approval, he said.
The reason for the deferment of the project was concerns raised by the Committee regarding the past track record of the company, technical knowhow, financial credibility of investors, market orientation and justification of the requirement of 4,000 acres of land for the project.
The Committee which met on August 4, 2017 was of the view that the decision could not be taken due to lack of clarity and information.
The investor was informed to re-submit the proposal by addressing the concerns identified by the Committee, he added.
The proposal was re-submitted by the investor on October 11, 2017. But the Committee which met on November 10, 2017 decided that approval was not possible because the investor failed to submit a comprehensive project proposal with the required information, Mr. Ariyasinghe revealed.
Accordingly, the BOI has issued a letter to the investor to submit a comprehensive report as instructed by SWIAC, but up to now there was no intimation form the investor, he added.
Given the broad scope of the project, the investor has been directed by SWIAC to submit a proper business plan, with cost breakdown, projected cash flow, infrastructure requirement, marketing plan, exporting countries, technology partners, specific project implementation plan for the entire project, etc, Board Member of the BOI, Mangala P.B. Yapa disclosed.
He noted that the company has also been directed to provide sources of finance with a specific timeline along with equity and loan components.
Without proper details the SWIAC cannot approve a complex project of such magnitude, he said.