Kalpitiya island only leased, not sold - SLTDA | Page 2 | Sunday Observer

Kalpitiya island only leased, not sold - SLTDA

15 May, 2022

The Sri Lanka Tourism Development Authority (SLTDA) yesterday clarified that it had not sold the Uchchamunai island in Kalpitiya but only signed a lease agreement with an investor to develop it.

In a media release yesterday, the SLTDA stated that the island has been released to a foreign investor for 30 years and refuted allegations that it has been sold to a foreign party outright.

The Authority was responding to reports that Uchchamunai, the second largest island in Kalpitiya had been sold to a Swiss company without adhering to due guidelines in the midst of the political and economic crisis in the country.

The SLTDA stated that a lease agreement was signed for 30 years on May 11 to a foreign investor in an attempt to drive much needed Foreign Direct Investments (FDIs). “The lease rental is based on the value provided by the Department of Government Valuation in October 2020 on which the agreement was finalised,” the release added. The stated 417.5 million USD is the project cost estimated by the investor for a tourism project that will be implemented in stages. The Authority reiterated that the project will commence when approvals from the line agencies including the Coast Conservation, and the Environmental Authority are received.

The release stated, “As per the Tourism Act No. 38 of 2005, the SLTDA is mandated to lease out (not sell) SLTDA owned lands to potential investors to develop and operate hotels and resorts in a planned and sustainable manner. The SLTDA as in the past has continued to do so, attracting foreign and local investments, and has been held answerable to the Committee on Public Enterprises (COPE) of Parliament for any delays in signing of lease agreements for approved projects.

“Regarding the Uchchamunai island in Kalpitiya, the SLTDA in July 2019 called for potential investors via newspaper advertisements in all three languages. Post evaluation and approval of the Project Proposal Evaluation Committee, it was approved by the Board of SLTDA, which includes industry stakeholders and Government representatives, in February 2020.

“In August 2020, the Minister of Tourism via the Secretary Ministry of Tourism approved the signing of the lease agreement. The draft agreement for the lease in terms of the technicalities was finalised in October 2020 and the draft agreement finalised in December 2020. It was ready to be signed in March 2021.

“However, due to the pandemic and internal affairs of the investor, the agreement signing was delayed. In April this year, the Board of Investments (BOI) provided the investor with an ultimatum to sign the lease agreement on or before May 11, 2022, failing which would result in the withdrawal of the approval.

“As a result, the investor agreed to sign the lease agreement with SLTDA on May 9 or 10. However, owing to the unfortunate incidents that occurred on May 9 and 10 in Sri Lanka and given the BOI’s original request, the SLTDA management arranged the signing of the lease agreement for a 30-year period as per land alienation policy on May 11.

The SLTDA also wishes to clarify that despite popular opinion, the SLTDA nor the Government or any related stakeholder obtained 417.5 USD million as a result of this transaction. The agreement was purely to lease out land for 30 years with ultimate ownership remaining with the SLTDA.

“For the SLTDA, as reiterated before, the mode of income is by lease rental where the investor will monthly pay a fixed fee for 30 years which is based on the valuation done by the Department of Government valuation in 2020. The figure of USD 417.5 million simply represents the total commercial value of the investment made by the said investor.

“We kindly request the tourism stakeholders and the public in Sri Lanka to be cautious and not to be misled by false and incorrect information.”

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