Sri Lanka teams up with Chinese firm for $1.4 billion port city

COLOMBO | Wed Jul 24, 2013 9:12am EDT

(Reuters) - Sri Lanka has finalized a $1.43 billion deal with China Communications Construction Co Ltd (601800.SS) to build a city on a 230 hectare site that will be reclaimed from the sea, the head of the state-run Ports Authority said on Wednesday.

The site is next to the island nation's main Colombo port and Colombo's historic Galle Face Green seafront. It is also close to where Shangri-LaHotels Lanka Ltd, a subsidiary of Hong Kong-listed Shangri-La Asia Ltd (0069.HK), is building a 500-room hotel.

"The Chinese firm will invest in reclaiming the land and infrastructure of the port city," Priyath Wickrama, chairman of Sri Lanka Ports Authority, told reporters. "It will be given around 50 hectare of reclaimed land on a 99-year lease for its investment."

The 39-month long construction project will start in September, Wickrama said, adding the city would include eco-parks, residential areas, offices and shopping malls.

Since the end of a nearly three-decade war in May 2009, the Indian Ocean island nation has been spending heavily on infrastructure, including ports to attract foreign investments to its $59 billion economy.

It has already created new land near the proposed port city as part of its expansion of the Colombo port to double its capacity by 2015.

(Reporting by Shihar Aneez and Ranga Sirilal; Editing by David Holmes)

Banking system under threat as CEB, CPC and Mihin on verge of collapse: COPE

* Mihin director board remunerations soar despite losses

July 24, 2013, 8:37 pm 

The parliamentary Committee on Public Enterprises (COPE) warned that state-owned enterprises such as the Ceylon Electricity Board, Ceylon Petroleum Corporation, Mihin Lanka and others are on the verge of collapse which could threaten the stability of the country’s banking system.

"The severe losses of the Ceylon Electricity Board, Mihin Lanka Ltd. etc. had been due to the under-selling of their services for not being able to pass the burden on to the General Public. If this situation is not addressed promptly, the institutions like CEB, CPC, Mihin Lanka Ltd. are on the verge of a collapse as entities which would in turn affect the banking sector in the country," said the latest COPE report which was presented to parliament on Tuesday (23) by its chairman DEW Gunasekara.

"The greatest challenge faced by the public enterprises with a commercial basis is that they are required to compromise on catering to the national interest of the country whilst being engaged in a highly competitive dynamic business environment. The Committee recommends that the Central Bank with the General Treasury should formulate a system to monitor the lending process of the banks to such businesses , avoiding the risk of any possible collapse of the banking system," COPE said.

Some of the key COPE findings pertaining to CPC (examined on Nov 16, 2012), CEB (November 19, 2012) and Mihin Lanka are as follows:                         Read More...