Most of the bill of last week's bomb blast is expected to be footed by local and international insurance funds, as institutions in the vicinity had taken the precaution of buying separate cover terrorism.
Preliminary estimates puts the reconstruction cost at between Rs 1.5 to Rs 2 bn, with bulk of the repair cost being for the World Trade Centre building.
Some damage had also been caused to glazed areas of Cargo Boat Development, Steuart House and the Equity Two building again.
The Twin Towers building has insurance cover placed abroad, who had paid for repair during the Central Bank bomb blast as well. Replacements for glasses damaged in 1996 were said to have cost Rs 70,000 each.
The buildings seem to have escaped severe structural damage, with most of the damage being limited to interior fittings. "But some civil works will be needed especially in the podium block of the World Trade Centre," an insurance official said. The Colombo Stock Exchange computers which were fully covered for terrorism were found to be undamaged. The main processors were shifted to the stock exchange's back -up sites.
Though repairing structural damage like glass is the responsibility of the owning company, furniture fittings and interior decor is the responsibility of the tenant. Unofficial estimates for the US $ 130 mn Twin Towers reconstruction go up to US $ 20 mn (in excess of Rs 1 bn).
The technical facilities of SITA (Societe Internationale de Telecommunications Aeronautiques) which provides backbone communications facilities for on line reservation for airlines in Sri Lanka was found to be operational after the blast. However Qatar Airlines, Lufthansa and Singapore Airlines offices at Galadari and Hiton were hit. The location of the office within the biulding was specially chosen to minimise damage. SITA was not considering moving out of the buidling Country Manager Mike Leonard said. In 1996 it's hub at the Ceylinco Building was destroyed.
The Union Bank which had its head office in World Trade Centre also found its computer sytems functioning, and were operating other branch offices. The Hong Kong Bank which also had a branch there moved its operations to the head office building.
With their guests evacuated to other five star hotels in the city, Hotel Galadari and the Colombo Hilton, two hotels worst affected in Wednesday's blast are now in the process of 'picking up the pieces', and consolidating.
"We have not been able to get a final assessment of the extent of damage but speculatively, it will be about 12 months before we are operational, Acting GM and head of Human Resource Development Mr. Graham Hatch told the Sunday Times Business.
"Not a single room, restaurant or banquet hall is intact, he said. It is understood that the hotel does not have a full terrorism cover.
"The kind of assistance (required to reconstruct Galadari) has been assessed at a emergency meeting with state authorities," Hatch said.
Soft loans from lending agencies and rescheduling of loans would be of assistance in the coming months for reconstruction.
Just down the road Hilton International Colombo, will try to get their Italian restaurant IL Ponte operational as soon as possible. The restaurant is hardly damaged and only the kitchen area is affected, Public Relations Director Ms. Yasmin Cader said. She said that the extent of damage was not yet assessed in detail.
Only 60 rooms of the total 387 rooms are undamaged, Mrs. Cader added. The hotel was running at 70% occupancy last week. All forward bookings had to be cancelled, Ms. Cader added.
Rebuilding the lobby together with the damaged rooms is our priority, Ms. Cader said. We will also have to get the Torana lounge and the coffee shop operational before we can open the hotel again, she added.
Staff is now working on a single shift, Ms. Cader said. She said that duty waivers on new equipment would be of assistance in reconstructing the hotel.
Meanwhile across the road, the Hotel Ceylon Intercontinental has suffered damage to its infrastructure for the second time in less than two years.
"The damage is ony 1/4 of the extent of loss suffered in January 1996, Sales & Marketing Director, Anil Udawatte told the Sunday Times Business.
Repairing the damaged windows in rooms facing Janadhipathi Mawatha alone is estimated at Rs. 3.5 million, Udawatte said. The total damage could be in the region of Rs. 5 mn. he added.
Although the hotel's lobby is slightly damaged, the ballroom and all restaurants are operational.
The hotel has a full terrorism cover, Mr. Udawatte said. "Since the last attack, we have taken out a comprehensive insurance policy that covers all aspects. We were taken by surprise last time, because our insurance policy didn't cover all areas, but this time, we are confident that we can claim money from insurance."
Galadari Hotel sources said that the attackers targeted the poya day because there are relatively few vehicles in the car park. Their main target the WTC building could not be accessed if the car park had been full, they said. The few unfortunate vehicles that were parked in the premises that morning, belonged to long-staying guests, others were leased out by the hotel.
Mr. Hatch also denied rumours that the target were the US green Beret soldiers, who are said to have been hotel guests.
Commercial establishments like airlines, and travel agents situated within the hotel premises have also suffered extensive damage though we witnessed staff attached to some offices clearing away the debris, so that they can resume routine operations temporarily. However, most of these establishments were expected to re-locate to other locations soon.
It has happened again. The terrorists have struck at the heart of the City of Colombo as they did last year when they attacked the Central Bank directing their onslaught on economic targets. Kolonnawa, the Central Bank and now the Galadari and Hilton Hotels and Twin Towers.
Disruption of business and commerce could seriously undermine the economic viability of the country and retard its economic growth. Foreign investors could be dissuaded from investing in Sri Lanka especially when there are other burgeoning investment destinations.
We need foreign investment for upgrading our industry and for developing our rather rudimentary infrastructure,our roads, our railways, our ports and our telecommunications.
The bomb was delivered in the car park of a leading hotel. Some tourists suffered injuries and had to be hospitalised. The effects of such an occurrence could very well result in a decline in tourist arrivals. Tourism is an important foreign exchange earner and an employment provider. There could be other adverse effects.
When buildings such as the Galadari, Hilton and Twin Towers are severely damaged, resources have to be mobilised for their repair and reconstruction, resources which could otherwise have been used for new investment or the development of existing businesses.
The privatisation effort could also be adversely affected. Invitations to foreign investors to put their funds into the enterprises which are to be privatised could meet with negative responses, because they would view the economic situation as unfavourable. For the same reason even local entrepreneurs could hesitate to make investments.
The consequences of these possibilities would be a deteriorating economic situation. And in such circumstances the war effort would be weakened, the budget would go into deficit, increased foreign borrowings to meet necessary expenditure for reconstruction could in time have an adverse impact on the country's foreign reserves and in general the people would face economic hardships.
This dismal scenario could, however, well be far from reality. When the bombing of the Central Bank took place a year ago there were fears that it would result, in prolonged adverse repercussions. And the drought and the power cuts which followed increased the sense of pessimism. But what happened? The economy, which exhibited a remarkable resilience recovered sufficiently to render the growth rate this year at an estimated 6 per cent
Indeed agricultural and industrial performance has been satisfactory this year and tourist arrivals have picked up appreciably. In fact, it is not unusual for the tourist industry to recover fast from an initial setback caused by fears that the tourist destination is a disaster zone.
Is it then too much to expect that the latest terrorist attack in Colombo will not result in dire consequences for the economy of a protracted nature?
A positive aspect, it can be said, to the immediate disruption of economic activity caused by terrorist action is that foreign countries strongly opposed to terrorism (and now we find that the United States is positively one such country) would be inclined to provide us with the resources for reconstruction.
Indeed, if we are positive in our approaches to how to deal with the initial disruption the bomb blast would cause, we can surely prevent the loss of business confidence and the consequences which would follow. All is not lost.
Return to the Business contents page
| HOME PAGE | FRONT PAGE | EDITORIAL/OPINION | NEWS / COMMENT | TIMESPORTS
Please send your comments and suggestions on this web site to
info@suntimes.is.lk or to
webmaster@infolabs.is.lk