Construction work on the 497-room Shangri-La Hotel Colombo located between the Galle Face green promenade and Beira Lake, has been suspended as the government is demanding the company to make the US$ 200 million investment promised by them, informed souces said.
The Shangri-La Asia company had brought in only $2 million instead of $200 million promised by them during the period of construction and this has led to a dispute with state authorities, these sources revealed.
The hotel company has paid $75 million initially to buy six acres of land and $50 million thereafter, for another four acres totalling $125 for 10 acres, opposite Galle Face in Colombo.
Treasury Secretary Dr. P.B. Jayasundera has repeatedly announced with responsibility in public at media conferences held on 28th December 2010 and 25th March 2011 as well as in several other occasions that Shangri -La’s Investment is in the region of $500 million and their investment in land alone is $125 million up-front cash payment.
But the company has so far not fulfilled its promise to implement the project in Colombo that will include a luxury hotel, high quality residencies and an up market shopping mall at a total investment of over $250 million.
“Shangri-La’s broken promise has prompted the state authorities to block some facilities and concessions offered to the company and the suspension of the construction work was due to these unexpected obstacles,” one source said.
However other sources said the construction work has been suspended because a main sewage line of Colombo had been detected underneath the super luxury hotel project site.
The company wants government agencies to remove the sewage line at state expenses and this has led to some dispute and that the work will recommence after settling the issue, a senior government official said.
However according to the masterplan of UDA, the sewage line is adjacent to the project site and there was no need to remove it.
Meanwhile Shangri-La Asia has scaled down the construction work of their other 300-room city resort in Hambantota due to the same financial dispute, senior government official disclosed.
The Hambantota project is to be completed in a haphazard manner hurriedly due to pressure exerted by a top politician to expedite the work even by reducing the number of rooms.
The company has bought the land at a cost of $3.5 million which is out of a total investment of $109 million.
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