By Ravi Ladduwahetty
A stinking property deal has now surfaced within the Slave Island area over a leasing of 273 perches prime commercial land.
The Ceylon Today, in the lead story of its last Sunday edition, reported of a Rs 2 billion Janatha Estates Development Board (JEDB) land scam where a 273 perch block of prime commercial land at Vauxhall Street, Colombo 2 was to be leased out at Rs 4 million per perch when the market value of the land was Rs 8 million per perch.
The venture entails the mixed development project, which will feature a shopping spaces, office spaces and residential apartments spanning 35 storeys on a 273 perch block of land belonging to the Janatha Estates Development Board on 155, Vauxhall Street, Colombo 2. The investors are Mr. Paint Lanka (Pvt) Ltd of Sri Lanka and Procon Development (Hong Kong) Ltd of Hong Kong. The investment is expected to be
US $ 200 million. The lease period is 99 years and the upfront lease payment for the total lease period is Rs 1,150,000,000.
However, during the Cabinet Committee on Economic Management, at its meeting in Committee Room No. 3 in Parliament, on 8 March,
R. Paskaralingam, advisor to the government, explained that a Japanese investor was waiting for the clearance for a mix development project at the Vauxhall Street JEDB land and that the Japanese ambassador was also concerned about the delay of the project implementation.
Paskaralingam has also said the concern was the value of the land which was valued at Rs 1.4 billion which was nearly Rs 6 million per perch. It is not the market value, but the upfront payment value.
The JEDB was not in agreement with this valuation and declared that the market value is Rs 8 million per perch. Further, it was mentioned that the Japanese investor was willing to pay the Chief Valuer's valuation and also willing to settle the cost of the pending Court case on the land.
At this meeting, the JEDB Chairman had also explained that there was a pending statutory payment and other loans that the JEDB had to pay and it was expected that the proceeds of the land sale was to settle all statutory payments and it was necessary to obtain a higher value.
The land in question is 372 perches in extent. However, the lessee is only paying rent for an extent of 107 perches. 153 perches have been made available to the lessee free of rent. The current monthly rental is between Rs 10 and 30 per square foot is about Rs 125. The agreement entered into by the previous regime is depriving the JEDB of a monthly revenue loss of about Rs 6,000,000 taking into consideration different rates for building up space and bare land.
Further, the same lessee is also leasing out another block of prime commercial property on Darley Road at a monthly rental of Rs 13.50 per square foot, the market value being Rs 125. The lessee on Darley Road is utilizing about 6,000 square feet free of rent.
The loss of revenue to the JEDB on the Darley Road property is about Rs 2, 3000,000 per month. None of the lease agreements have incremental clauses.
The total loss of revenue to the JEDB on both properties is a staggering Rs 8,000,000 per month. Therefore, the contract is flawed and there has been a clear political patronization by the previous regime and cannot be overlooked.
Further, the proposed Japanese mixed development project promoted by the same lessee, is presently being contracted at the rate of Rs 1.1 billion for a period of 99 years which quantifies to perch valued at about Rs 4,200,000 whereas the estimated market value is about Rs 8,000,000 per perch.
Currently, there are counter offers from credible companies nearly double the present offer. This project is an unsolicited development project and there are better offers currently.
There are two credible offers way above the present offer. Awarding of the development project at the rate offered, will result in the credibility of the Yahapalana government. This warrants for the high level investigation, as it is clearly evident as malpractices are prevalent.