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Towering story of pride and waste
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By Namini Wijedasa
While conflict raged between the military and Tamil Tigers, the two countries signed slew of cooperation agreements. The proposal to erect a telecommunication tower to rival all of Sri Lanka’s tallest buildings was not among them.
Yet it was during this seven-day trip that the idea germinated in President Rajapaksa’s mind, senior officials said. His inspiration was the 405m China Central Radio and TV Tower in Beijing.
The LTTE unleashed air strikes in 2007. ‘Eelam War IV’ was in full swing. The military intensified attacks in the East. In January 2008, the Government officially terminated its nominal truce with the Tigers.
Priorities, priorities
Maj. Gen. (Rtd) Prasad Samarasinghe
Just two months later, the Director General of the Telecommunications Regulatory Authority of Sri Lanka (TRCSL) sought a meeting with the Head of the Moratuwa University’s (UoM) Architecture Department, Prof. Samitha Manawadu. A close associate of President Rajapaksa, Priyantha Kariyapperuma was a political appointee. And he was in a rush to build a telecommunication tower.
The DG showed Prof. Manawadu a model of South Korea’s 236m N Seoul Tower and not the Beijing TV Tower. The President wanted “something similar”, he said. Could the Moratuwa University provide consultancy services?
At the time, nothing was taller than the 150m-high World Trade Centre buildings in Colombo Fort, designed by Singaporean engineers. While Sri Lankan architectural expertise was adequate, specialist skills would need to be outsourced. That could be sorted out later, Mr Kariyapperuma insisted.
An advisory group was quickly formed headed by Nimal de Silva, Senior Professor of Architecture and then Director General of the Central Cultural Fund. They inspected two sites in Peliyagoda, including an overgrown 22-acre land which was the State Engineering Corporation’s (SEC) precast yard. The concept for the tower was born here: while walking around, the two academics spied a single pink lotus bud in a marsh.
The team started drawing. But they didn’t think the plan would bear fruit as there was no financing. Several projects, including the vital ADB-funded construction of schools called ‘Isuru Pasal’, had been suspended. The country was on an intense war-footing.
On May 17, however, Mr Kariyapperuma called for sketches. “He immediately took us to meet the President,” Prof. Manawadu recalled, indicating a keen interest at the highest levels. “The President said the concept was good but that it looked like an onion!”
Mr Rajapaksa later wrote to Cabinet that he had been “highly impressed” by the preliminary design.
Defence Ministry, President’s Office reject RTI request
Window cleaners at work before the tower is opened to public on Thursday. Pix by Indika Handuwala
In July, the President’s Office sought Cabinet approval for the TRCSL to implement and finance the 250m tower as “a national icon to exhibit national heritage of Sri Lanka”. By the next Cabinet paper in October 2010, the height had shot up by a further 100m to 350m.
The Sunday Times filed a request under the Right to Information Act for Cabinet papers related to the tower. But only the Finance Ministry acceded. The President’s Office and the Defence Ministry refused via the Cabinet Office without giving reasons. A second direct application to the Defence Ministry did not even elicit the legally-mandated acknowledgment.
Consequently, all but Finance Ministry documentation was obtained from other sources.
Following the usual practice of that era, Cabinet instantly rubberstamped the project (in August). However, a note from Construction and Engineering Services Minister Rajitha Senaratne called for a “proper feasibility study” before commencement. No investor would take on an initiative of such magnitude without it.
The total estimated project cost—Rs 9.3bn at the time—did not include land, the note also said. This still stands true. And there didn’t appear to be a “proper assessment” of the income that could be generated once the facility was completed.
The Central Bank, then headed by presidential favourite Ajith Nivard Cabraal, gushed that the proposal “would facilitate growth of the TV, broadcasting and communication services and as a national requirement”.
It also mildly suggested that the required monies be raised through a public-private partnership without burdening the Government budget. That didn’t happen. The project was loan-funded. The TRCSL today holds the liabilities.
No feasibility study
The required “proper” feasibility study was never done. A special Government audit in 2019 found only a financial feasibility carried out by the Project Consultancy Unit (PCU). When various shortcomings were queried, the PCU had replied that the study was done for free.
Among its deficiencies: The interest on the China EXIM Bank’s loan was four percent plus prevailing LIBOR. But the financial feasibility calculated borrowing cost at 3.5 percent, causing a significant understatement of over Rs. 500mn.
The report hadn’t considered loan interest for the period of disbursement; neglected to include management and commitment fees for unutilised loan amounts; understated insurance cost by over Rs. 680mn; and overstated the present value of budgeted income by more than Rs 2bn.
All this highlights severe failings in Sri Lanka’s processes—particularly in the approval of taxpayer-funded, multibillion rupee vanity projects that have direct political backing.
In March 2009, TRCSL authorised the PCU to travel to China to select project partners (there would be several visits in ensuing years, often with engineers and Commission officials in tow). An international tender to invite bids from other countries was not considered. It would only be China.
Unsolicited proposal,
of course
Sri Lanka’s Ambassador in Beijing, Karunatilaka Amunugama, set up meetings with two specialist companies. Both proposed a design-and-build arrangement. After long negotiations, the PCU deemed their fees too high and rejected them. Nevertheless, Prof. Manawadu got the President’s go-ahead to draft a design-and-build contract.
Suddenly, the pace slowed. Mr Kariyapperuma spectacularly left TRCSL after he was accused of secretly backing opposition candidate Gen. Sarath Fonseka at the 2010 presidential poll. And a spat erupted over the Peliyagoda site when Minister Senaratne reportedly sought the project’s principal subcontract for SEC despite it not having a construction arm.
Anusha Pelpita replaced Mr Kariyapperuma. (Incidentally, Prof. Manawadu served nine DGs and seven chairpersons from 2008 onwards, including two retired military officers. He was 55 when he started this work. He will turn 69 next month, a few days after the tower is finally opened to the public). 
Some months after the election, the PCU was summoned again. Two companies named National Electronics Importers and Exporters Corporation of China (CEIEC) and China Aerospace Long March International Trade Company (ALIT) had jointly submitted an unsolicited proposal based on the UoM’s concept that Ambassador Amunugama had given them. They wanted the project.
Later that day, everyone trooped into the office of the re-elected President, who consented to the Chinese proposal as it matched the UoM plan. Then he asked them how much it would cost. According to Prof. Manawadu, the Chinese parties had not worked that out.
“The Chinese officials looked at my face,” he narrated. “My cost had been US$ 100mn. So they said US$ 100mn. And the President said that if it was US$ 100mn, they could go ahead.”
The contract price came to US$ 104.3mn. But design changes later introduced by the TRCSL added US$ 9.3mn to the package. Called “variations”, this is a popular method to bump up numbers once the original contract price is agreed upon. It was particularly common in road construction during the post-war Mahinda Rajapaksa era.
There are still certain officials at the Highways Ministry who are well-versed in the art of “change in scope”.
“Total chaos”
The final CEIEC-ALIT agreement was signed in January 2012. But there was serious muddling throughout—testimony to just how haphazard and ill-conceived the project had been.
After a detailed blueprint was finished for a telecom tower and theme park on the Peliyagoda site, the location was shifted to 2.5 acre property adjoining the Beira Lake in D R Wijewardene Mawatha.
“I had to redesign everything,” Prof. Manawadu said. “And when I plotted the same plan onto the new site, it could accommodate only 50 percent of the original! The Beira Lake would have to be reclaimed for the rest.”
Later, the acreage rose to 10.4 with acquisition of Postal Department and Sri Lanka Ports Authority (SLPA) land. For months, however, the project was bogged down in ownership battles between the SLPA, the Urban Development Authority (UDA) and others. For instance, the SLPA demanded compensation.
These disputes were only resolved when the Land Commissioner bitingly declared at a heated meeting that all Crown properties belonged to his Department and that he would hand them over in a suitable manner.
The entire property was eventually vested in the TRCSL. The new Lotus Tower Management Company (Pvt) Ltd will start paying a rental—the amount is yet to be decided—to the regulator after a two-year grace period. This is one way the liability-holder will earn income. The other will be through the first and second floors of the tower house and the antenna mast.
Meanwhile, the SLPA still gripes that it didn’t get a red cent from the deal.
Still more design changes
Between 2012 and 2013, major design shifts came about. For instance, the tower base was revised from conference facilities to shops. Lift speeds were also adjusted. More balconies were put in. The proposed revolving restaurant was shunted from the fourth to the fifth floor. A second banquet hall was added. And a 22-room hotel at the top became a seven-room State guesthouse.
“It was a huge task,” Prof. Manawadu said. “The variations, I would say, were unprecedented.” A Cabinet paper obtained through RTI revealed that there were 68 of them. It is not immediately clear why this happened. Evidently, a feasibility study wasn’t the only thing missing. The project’s political backers had no business plan.
Activities were suspended again pending the 2015 presidential election which ushered in Maithripala Sirisena. The new TRCSL DG M.M. Zuhair then wanted the lift provider changed from Fujitech to Mitsubishi “for political reasons”. The matter ended up in court, causing a delay of about two years. The original awardee retained the contract.
The cumulative effect was that the tower wasn’t done by May 2015 as planned. It was not completed by October 2017, the second extension; not by May 2018, the third extension; not by December 2018, the fourth extension; and not by June 2019, the fifth extension; not even by October 2021.
Without being put to use, the building couldn’t be maintained or finishing touches completed. There was no deadline. Costs were mounting. In the meantime, the US blacklisted CEIEC for electronics sales to Venezuela. This complicated matters for the company as they could no longer carry out dollar transactions. The contractors, too, have “suffered”, authoritative sources said.
A thorough audit identified 21 major defects. The tower was handed over only in February this year after these were fixed.
No looking back
The Treasury has now allocated Rs 500mn to the Lotus Tower Management Company (Pvt) Ltd (LTMC). There will be no more cash injections, said Maj. Gen. (Rtd) Prasad Samarasinghe, CEO and Director. The goal is to run a profitable venture—“without being a burden to the country”.
The Lotus Tower is owned by TRCSL but managed by LTMC under the Treasury, with an independent Board of Directors. It has been rebranded as the epicentre of technology and entertainment. Income will be chiefly from rent. Every sellable inch of space is on offer.
Calls for expressions of interest have attracted significant applications. The higher you go, the more expensive it will be. Some of the earnings will be ploughed back into upgrading interiors, lighting and refurbishment.
The company hopes to surpass Rs. 1bn in annual revenue after 2024 with an estimated profit of Rs 200mn each year (and around Rs 900mn in five to six years).
Even the staunchest supporters of the Rajapaksa administration admit that the Lotus Tower dream was lost on them. The challenge now is to earn handsomely from it–if only to validate a project that had never really made sense to the tax-paying public.
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