Sri Lanka government at risk of claims by Chinese port city project - document

Sri Lanka would be exposed to the risk of claims from the firm managing a suspended Chinese-backed real estate project if the government fails to obtain approvals needed by the project within 60 days, a government document showed on Thursday.

The $1.4 billion Colombo port city project was suspended by President Maithripala Sirisena's new government in March because it was found not to have the proper permits and approvals.

In a cabinet paper requesting a six-month extension for the project, Ports Minister Arjuna Ranatunga said the attorney general had brought to his attention that the obligation to obtain the required approvals "for the reclamation works rests with the government".

Ranatunga's cabinet paper comes after CHEC Port City Colombo (Pvt) Ltd, the local company handling the project, proposed two alternative clauses to its original agreement signed last year that would allow the project to be extended by six months.

In the paper, Ranatunga said "if such required approvals cannot be obtained within a period of sixty days as required ... by the project company, the government would be exposed the risk of receiving claims from the project company for losses suffered by the project company as a result of not being able to commence the reclamation work".

Last month Finance Minister Ravi Karunanayake said Sri Lanka is offering a compromise that could allow the port city project to restart, and renegotiating the deal.Read more >>