To sink or swim with Colombo Port City?

April 05, 2015

-The mega US$ 1.35 billion project was launched without a
feasibility study; no valid approval for sand extraction from
relevant state agencies -Available information shows profits for
investor rather than country-specific criteria was sole motive for
project expansion -Little known fact: Final footprint as vast as
1,200 acres twice the size of much-talked about 233 ha area
By Eng. Channa Fernando-Sunday,

The Colombo Port City Development has been in the limelight during the past three
months. A range of articles has been published by organisations, environmentalists,
politicians, social media groups, the developer/investor and others associated with the
developer on engineering and environmental studies. The involvement of wider
segments of society in these discussions indicates the perceived importance of the
project.
In the presentation of diverse views, however, certain salient facts were found to be
either deliberately or unintentionally omitted or misrepresented. Due to this distortion,
it is apparent that the public is confused about the real situation of the project and its
impact on the country.

They came, they bid, and made a mess of it: Possible environmental impacts ignored and laws not followed in the execution of the
Colombo Port City project , investigations show

This article briefly assesses the process followed with respect to the Port City Project.
It identifies deficiencies (as perceived rationally by the writer) and suggests a way
forward. It does not comment on how beneficial or disadvantageous the contractual
conditions in the agreement between the Chinese developer and the Government
(Ministry of Port and Highways) are, as the writer is not qualified to make such
analysis. However, if any such contractual condition intervenes with technical and
environmental aspects, such occurrences will be highlighted. An attempt has been
made to present true facts to the maximum possible, supported by documentary
evidence. There could still be gaps or uncertainties, mainly due to the non-availability
or inaccessibility of certain project information.
It shall be noted at the outset that this article does not intend to blame anyone for the
mistakes or oversights, but to objectively identify them (thus, learning a lesson for
managing similar situations in the future) and to propose a way forward, while keeping
the interests of our country as foremost.
It also does not look critically upon Chinese investment. China has stood by Sri Lanka
in the most critical hours of need, in addition to providing financial assistance towards
many major infrastructure development projects. Nevertheless, this does not deter in
bringing the publics focus on the wrongdoings of any party, irrespective of nationality.
After searching through all available information, it was not possible for the writer to
find an approved project feasibility study for the proposed Port City Development. It is
indeed very surprising, yet true, that the Government of Sri Lanka has gone ahead
with a US$ 1.35 billion mega project without a comprehensive project feasibility study
encompassing technical, socio-economic, environmental, and financial aspects of the
proposed development.
Such a study would have identified alternative development concepts and

implementation arrangements such as whether it should be full-scale development or

one that is phased-out. It would have considered the projects socio-economic benefits
and impacts on the country at large, as well as financial returns. It would have
explored the potential land use plan and environmental concerns associated with
alternative development concepts. It would also have projected the utilisation level of
the countrys natural and other resources and looked into the required upgrading of
existing utility services.
The original proposal to create a Port City was made in 2004. A plan for a Western
Region Megapolis produced by a Sri Lankan team with the Singaporean company
CESMA included it as part of Colombo city development. It pointed out that, by
upgrading land in such a mannerafter the urban infrastructure elsewhere in
Colombo was improvedmarket prices would rise to sufficiently high levels to justify
the cost of reclamation. It recommended filling only in the area impacted due to the
construction of the South Harbour breakwater. It suggested a systematic city
development process owned by the country, with a much smaller scale of sea
reclamation subjected to thorough and comprehensive study.
In 2010, it appears a few senior professionals in their individual capacities had done
an Initial Technical Pre-Feasibility Study. It focused on a small-scale development of
200 acres, or about 80 hectares, as had been initially planned. It narrowly addressed
breakwater layouts and cross-sections (mainly as a learning step from Colombo South
Port Development). It looked at wave conditions, floated ideas for protection of
reclaimed areas, gave preliminary construction estimates and suggested a way
forward. The report is neither comprehensive nor relevant in the context of the current
proposed scale of development. It could rather be considered as a concept note.
The other available document is the developers project proposal, prepared in October
2012 and submitted to the Board of Investment with an application for BOI status. It
focuses purely on the developers interests, his return on investment, marketing
prospective, funding arrangements, etc. The report does not address the project
feasibility at all. Hence, the project has moved to construction phase without knowing

its technical, financial or socio-economic viability.

A popular argument from some of the supporters of the project is that the South Port
Development is of similar scale, or larger, when compared with the proposed Port City
development. If the South Port Development is acceptable to the country, they assert,
there is no reason for so much resistance to the Port City Development.
A clear and simple counter-argument is that the South Port Development was done
after a comprehensive feasibility study, encompassing all the aspects described
above. The best possible technical option was selected. A phased-out development
was proposed, based on demand forecast as well as material and financial
requirements. An ad hoc development like Port City Development cannot be compared
to a properly conceived South Port Development.
A question that often comes up is: Is Port City bad for the country? The most direct
answer to that is: Do not know. Since there is no feasibility study exploring its
benefits to the country, and its socio-economic impacts, it is not known whether the
Port City is good or bad for Sri Lanka.
An offshore development could be beneficial to a country like ours, provided proper
process is followed and an appropriate, sustainable scale identified through a
comprehensive feasibility study. Some available information indicates that the present
blown-up scale was decided solely to achieve the expected return on the investment
for investor/developer, and not on any other country-specific criteria.
To date, the quantity of natural resources to be consumed by the Port City is not
known. The intermediate stage involving 300 acres (120 ha) was suddenly blown up to
a 575 acres or 233 hectares without any assessment of the availability of natural
resources, mainly sand and quarry material. A lesser known fact is that, although the
Port City is set to be 233 hectares in size, the extent of its total footprint is a massive
1,200 acres or 485 hectares including waterways and canals.
On the basis of available, accessible information (average reclamation height of 24

metres and surface area of 2,330,000 square metres), the writer assessed that 55-65
million cubic metres of reclamation material will be required. Since this is the net
volume, and allowing for 15-25% wastage (a common practice when extracting sand
from sea bed), the gross volume required will be in the range of 65-80 million cubic
metres of sand.
At the time construction started, there was no infrastructure development plan in
place. It is understood that a draft master plan submitted to the Urban Development
Authority (UDA) in late January 2015 was returned to the developer for further
improvement.
The developer has widely claimed that 83,000 employment opportunities were at stake
in the event of the project being cancelled. It is confusing how this figure was arrived
at without a project feasibility, development plan or land use plan. In the absence of
substantial proof, this can only be considered a ruse.
The developers recent media communications argue that the Sri Lanka Government
is to get 62 hectares free without spending a cent and that there should, therefore, be
no objection to the project. In other words, the State and its people should be grateful
to the developer for giving land free of charge without retaining the entire area.
The writer is baffled that nobody has so far publicly countered this primitive argument.
Apart from using the territorial waters of Sri Lanka, the developer is extracting an
unprecedented volume of the countrys natural resources to realise a poorly conceived
(from Sri Lankas point of view) development at his own will. It looks like the projects
sudden, two-fold expansion was mainly to increase the investors return on investment
at the expense of Sri Lankas environment and limited natural resources.
Both sea sand and quarry material have opportunity costsan economic term
meaning value of the best opportunity foregone and the environmental cost of the
consequences. The developer has assigned scant importance to the value of these
natural resources or associated environmental consequences.

The Government has offered offshore sand free-of-charge to the developer. The
royalty fee of four per cent of market value of the sandsomething any developer
must incur in using the countrys limited natural resourceshas been waived. This
alone totals to about Rs. 10 billion for an estimated 65-80 million cubic metres of sand,
at the going market rate of Rs. 10,000 per cube of sand (not counting the sands
financial value of nearly US$ 1.7 billion).

The opportunity cost

foregone by the people of this country, therefore, exceeds US$ 1.8 billion. This is more
than the total investment of just US$ 1.35 billion said to have been committed by the
developer. No opportunity cost has been allocated for the loss of the nearshore
seabed area of 1,200 acres. While Sri Lanka gets 62 hectares, the developer gets 20
hectares on freehold basis and another 88 on a 99-year lease, totaling 108 hectares.
On behalf of the developer, the Sri Lanka Ports Authority (SLPA) made initial
application for the EIA to the Coast Conservation and Coastal Resources Department
(CC & CRMD). The Concession Agreement places responsibility of obtaining all
approvals on the SLPA.

This initial application was for the development of 300 acres (120 ha). The project
involves dredging and sand extraction from burrow areas, transport to the reclamation
project site, dumping at project location, construction of coastal defensive structures
and spending beach, development of infrastructure including a marina.
Under environmental laws, any development within the coastal zone (2km offshore
from the low water line and 300m shoreward from the high water line) is under the
jurisdiction of the Coast Conservation and Coastal Resources Management
Department (CC & CRMD). Any sea-based activity beyond the 2km offshore boundary
is under the Central Environmental Authority (CEA). Any pollution of marine waters is
monitored by the Marine Environmental Protection Authority (MEPA) which is
responsible for preventing destruction of marine habitats around the country due to
land or ocean based activities.
Accordingly, the CC & CRMD is the Project Approving Agency (PAA) for reclamation
while offshore sand extraction from burrow (mining) areas is under the CEA. At the
request of the CEA, the CC & CRMD issued Terms of Reference (TOR) for the Project
EIA. In doing so, it incorporated some environmental concerns associated also with
offshore sand extraction as it was logical for sand extraction and dumping on
reclaimed areas to be assessed as an integrated activity.
However, the developer prepared the EIA report through his consultants in April 2011
without impact assessment on sand burrow areas. The reason could be that no burrow
areas were identified at the time to meet the total requirement of filling material. Still,
the CC & CRMD granted preliminary clearance subject to the condition that the
developer will carry out a separate EIA study for burrow areas.
In the meantime, the developer decided to expand the project by nearly 200 percent,
from 120 hectares to 233 hectares. Strangely, the developer himself (through his EIA
consultant) proposed an addendum to the original EIA without receiving fresh TORs
from the CC & CRMD. Thus, the addendum was drawn up on self-defined TORs by
the developer, who is the project proponent, perhaps for the first time in the history of

any EIA conducted in Sri Lanka for a mega project of this nature.
To backtrack, it is common practice for a PAA to let a developer submit an addendum
to an approved EIA to reflect minor changes in the scope of a project. This is to save
time. But this must be done through supplementary TORs issued by the PAA based on
an application by the developer highlighting the change in project scope. It is not done
at the will of the developer.
In the case of the Port City, the CEA was excluded from discussions on the addendum
to the EIA. It also appears that the addendum ignores several critical and important
environmental issues (see graphic).
It has been argued that any major impact not identified during the EIA process could
be included in the Environment Management Plan (EMP). Although the EMP is meant
to be a dynamic document that can be updated upon the identification of any new
impacts during project execution, it cannot be used to cover the deficiencies of an EIA.
As identified by the developer himself, the EMP is to guide implementation of
mitigation measures identified during the EIA study, and to act as a tool for the
management of the projects environmental performance.
The proposed development involves both sand extraction (burrow areas) and
reclamation. However, the EIA has been done treating the two as separate activities.
Hence, the linkage between the two activities is lost and significant impacts could have
been missed out.
The social and community consultation that should have been conducted in a project
of this magnitude affecting the livelihoods of many strata of the city and suburban
communities was grossly inadequate. There was no socio-economic assessment on
fisheries and fishermen.
Meanwhile, in the absence of an EIA addressing offshore sand extraction and
transport to project site, the CEA issued separate TORs in September 2011 for an
Initial Environmental Examination (IEE). The IEE report submitted by the developer

was rejected by the CEA, mainly on two grounds: a) The impact on the sensitive
ecosystems including fish breeding grounds and b) the developer failure to indicate
clearly the burrow areas that could fulfil total requirement of reclamation material.
The developer was advised to carry out sand exploration studies on additional
potential burrow areas under the guidance of Geological Survey and Mines Bureau
(GSMB), and to submit a fresh report. This is yet to be done, although the developer
seems already to have extracted 8.5-10 million cubic metres of sand (based on media
statements on percentage of work completed) without a permit.
The GSMB has only granted an Industrial Mining Licence (IML) for sand extraction
subject to preconditions; that is, the obtaining of environmental clearance from CEA.
Availability of clearance from the CEA is a prerequisite for GSMB to issue an IML as
such approval must stipulate conditions of extraction based on the environmental
safeguard measures spelt out in the approved EIA report.
In the first instant, therefore, the GSMB should not have issued such a conditional
IML. Since the precondition of obtaining CEA clearance has not yet been satisfied,
the licence issued, naturally, has no validity. Accordingly, any sand extraction carried
out so far cannot be considered to have been done according to the legal approvals.
Additionally, the developer has yet to comply with obtaining a permit from the Marine
Environment Protection Agency for dumping of material into the sea as per the Marine
Environment Protection (issuance of permits for dumping at sea) No.1 of 2013. This
requirement was communicated to the developer in October 2013.
As the validity of both the CC & CRMD permit as well as the IML issued by the GSMB
are subject to issuance of CEA clearance for the sand extraction, the project does not
possess any of the valid environmental approvals to proceed.
(The writer is a Senior Consultant Engineer in Coastal and Port Engineering)

A way forwardThe country should first decide whether it needs this kind of offshore
development and, if so, the appropriate scale and timing of such developmentwhether it
should be now or some years down the line. These decisions cannot be taken arbitrarily and
will involve an element of political will as well.
A comprehensive project feasibility study shall identify the sustainability as
well as the economically and financially viable scale of development. This
shall be followed by a comprehensive EIA with both the CC & CRMD and the
CEA jointly reviewing the assessment. There are no significant issues
related to the proposed location of Port City with regards to longshore
sediment movement and erosion. The Colombo South Port offers partial
shelter and, hence, there can be optimisation of cost on marine protective
structures. With those advantages, the proposed location is suitable for a
reclamation project like Port City, provided that a comprehensive feasibility
confirms its sustainability.
However, such initiative shall not violate the prevailing laws of the country,
and shall not disregard the impact on the environment. Mega projects of
this magnitude must go through a comprehensive planning phase, together
with identification of environmental safeguard measures. Such
development shall be through a national effort fulfilling national priorities,
but not on the whims and fancies of a commercial company.
Current Project Status and violation of environment laws
On March 06, 2015, the Government issued instructions to temporarily
suspend the project. The developer claimed that 13 per cent of the project
work was done by then. If so, it leads to multiple questions (according to
photographs that appeared in social networks after a recent guided tour of
the project by selected groups, the cited completion rate could be realistic).
It entails 13 per cent of the total sand volume being dumped on the
reclamation area. This involves a gross estimated volume of 8.5-10 million
cubic metres of sand being already deposited. What is the source of this
sand, when the CEA has rejected the IEE report submitted by the developer
for sand extraction from identified burrow areas and the GSMBs industrial
mining licence is invalid? Does this mean the developer violated the laws of
the country?
It is stated that dredging was done from the access channel of the Colombo
Port. If true, a separate set of issues arises:
An estimated 8.5-10 million cubic metres of sand could not be generated
from maintenance dredging of the channel within five months. It would
appear, then, that capital dredging (removal of large amounts of virgin
material from the seabed) has been undertaken in the access channel. If it
is assumed that the dredged portion of the access channel is within 2km

zone, has CC & CRMD approval been obtained for capital dredging? What
action has CC & CRMD taken in this respect? What is the overall impact on
the access channel by excessive deepening or widening that has taken
place due to excessive dredging?
It appears that, even if capital dredging is performed, such a huge volume
of sand cannot come from the access channel (if it has come from the
access channel, a survey would confirm the current depths and, thereby,
the total volume extracted). The other possibility is that sand extraction
was done from other, unknown locations. If so, which authority has granted
the approval for this?
Meanwhile, which regulatory authority (CEA or CC & CRMD) performed the
monitoring task? It is clear that since no approval has been granted for
dredging at this moment, the current Environmental Management Plan
(EMP) does not cover dredging activity and,hence, monitoring of the same.
In summary, the developer has violated conditions stipulated in the
environmental permits issued by the respective agencies:
CC & CRMD permit, by commencing the reclamation work without
obtaining environmental clearance for sand extraction from the seabed;
The CEA to take appropriate action for not obtaining an EIA clearance for
sand extraction from the offshore areas;
IML Permit issued by the GSMB, for not possessing an approved EIA for
sand extraction process.
It is evident that the developer has violated environmental laws of the
country. Hence, the respective project approving agencies shall
immediately demand clarification from the developer on those violations. If
clarifications are unsatisfactory, provisions are in place to immediately
revoke the issued permits, as mandated by the respective laws and as
stipulated in the respective permits issued to the developer.
Posted by Thavam