Lotus Tower fails to bloom on time due to irregularities
Sri Lanka’s landmark 350-metre tall Lotus Tower slated to blossom in 912 days by 2015 following its ground breaking in November 2012 is still to see the light of the day owing to irregularities and embezzlements during the construction process.
A Chinese conglomerate consisting of China National Electronics Import and Export Corporation (CEIEC) and Aerospace Long-March International Trade Co. Ltd. (ALIT) were to complete the project on a Turnkey Basis before the end of this year, Telecommunication Regulatory Commission (TRC) sources said.
The value of the project was US$104.30 million. Although the period for completing the project had been extended up to October 2017, it was not completed even by May 31, 2018, a recent government audit query revealed.
Thus, there had been a delay exceeding 200 days from November 2017 up to May 2018, the Auditor General’s report observed pointing out that in terms of agreements, the demurrage of $10.43 million for the said delay had not been recovered.
The land on which the Lotus Tower was erected had not been vested in the TRC by the Urban Development Authority (UDA) even by May 2018.
The EXIM Bank of China had disbursed the first installment of the loan on August 19, 2013.
However, in terms of the loan agreement, the period for the disbursement of the loan was due to be ended by August 18, 2016. By that date, a sum of $43,746,097 of the entire loan or 49 per cent had been released, the audit inspection highlighted.
It has been revealed that as a result of the construction work not being done on the due date, the agreed charge that had to be paid for not utilising the loan for the period from August 19 to October 27, 2017 alone had been $322,984.
EXIM Bank has taken action to restrict the total loan to $67,259,754 although the total amount of loan being $88,655,000 due to the exceeding of the period of the loan agreement and the agreed charges of $636,508 had been overpaid, the audit report disclosed.
The Cabinet of Ministers, in its decision dated October 27, 2010 had decided to vest the proposed television tower and the Entertainment Centre in a Management Consultancy Company.
The company has been entrusted with the task of establishing the television tower, and the Entertainment Centre as a public company under the ownership of the TRC.
This company has been directed to enlist it in the Colombo Stock Exchange and to issue a share capital of 30 per cent through an initial public issue.
However, in terms of the Sri Lanka Telecommunication Act, No.25 of 1991 and the Sri Lanka Telecommunication (Amendment) Act, No.27 of 1996, the TRC has no powers to implement this process, the AG’s audit report revealed.
By reason of impossibility of establishing a company in terms of the Telecommunication Act, action had been taken to lease the Lotus Tower to a property Management Company as TRC has no powers to set up a public company.
However, even by July 2018, no Cabinet approval had been obtained for this, the audit report pointed out disclosing that Cabinet approval had not been obtained even by July 30, 2018 for the vehicle park with an investment of Rs.4 billion as proposed by the TRC.