China-funded Lotus Tower stays idle in Colombo

- Rs. 10 million monthly loss from Mattala Airport  as well

The Colombo Lotus Tower, which was funded by China and was declared open in late 2019 by the then President Maithripala Sirisena, remains non-operational to-date in the heart of the Capital of Sri Lanka.

The 356.3-metre-tall tower, the tallest telecommunication tower in the whole of South Asia, was constructed at a cost of USD 104.3 million, 80% of which was funded by China. The rest of the funds were provided by the Telecommunication Regulatory Commission (TRC) of Sri Lanka.

When it was declared open partially for the public in September 2019, the then Sri Lankan President made the allegation that one of the Chinese firms contracted to work on the project had disappeared with USD 11 million of state funds.  

The construction of the project began in 2012 under the administration of Sirisena’s Predecessor Mahinda Rajapaksa but the construction of the tower faced many hurdles largely due to lack of funds.  

According to the original plan of the project, the tower was to be developed as a telecommunication tower equipped with a hotel, a telecommunications museum, restaurants, auditorium, an observation deck, a shopping mall and a conference centre. Although it has been almost three years since the grand opening, the tower has not been operationalised. Neither the proposed features have been set up in the tower nor it has been opened for the public.

Today, it seems that the sole purpose of the tower is to illuminate the Colombo skyline to mark special days such as Vesak and Christmas or to raise awareness on days such as Breast Cancer Awareness Day and World Safety Day.

The Lotus Tower is one of several projects funded by China in Sri Lanka that have not yet yielded the expected outcome. A large amount of funds have been obtained from China as loans to complete these projects.

According to the data from the External Resources Department of the Ministry of Finance, Sri Lanka, out of the USD 26.4 billion in outstanding external foreign debt by the end of 2021, about USD 7.1 billion was debt from China.

However, projects like the Lotus Tower have become a burden to Sri Lanka as they have failed to generate a desired revenue to help pay back the loan installments.

The Hambantota Port is considered another white elephant and so is the Mattala Rajapaksa ‘International’ Airport. The Port which is situated at the Southern tip of Sri Lanka is now being operated by the Hambantota International Port Group after it was leased out by China on a 99-year-lease basis in 2017. A 70 percent stake of the port was leased to China Merchants Port Holdings Company Limited (CM Port) for 99 years for USD 1.12 billion.  Five loans were obtained to construct the Port under the government led by Mahinda Rajapaksa from 2007 to 2014. Although the port was leased to China for 99 years, there was no cancellation of debt obtained from China. The Hambantota Port deal cannot be considered as a debt-equity swap as many people believe.

The operations of the Hambantota Port did not generate sufficient revenue to match the debt obligations.  Following the completion of phase one of the project the port operations commenced in 2011. However, according to data issued by a Parliament committee, the accumulated losses of Hambantota port was USD 300 million as of the end of 2016.

The port operations have expanded since Hambantota Port was leased to CM Port but it is yet to prove whether it can generate sufficient revenue to assist with the debt servicing.

Meanwhile, the Mattala Rajapaksa ‘International’ Airport which was constructed at a cost of USD 210 million obtained from China is also struggling to survive since its opening in March 2013.

Out of USD 210 million spent on the project, USD 190 million came from the Chinese Government in the form of loans issued by the Exim Bank of China. Neither the Port nor the Airport in Hambantota have borne fruits. At one point, paddy was stored at the Airport warehouses. 

More recently, the newly appointed Minister of Ports, Shipping and Aviation Nimal Siripala de Silva said the monthly loss from operating the Mattala International Airport was Rs. 10 million.

While participating in an inspection tour and a staff meeting at the Airport on June 11, Minister de Silva emphasized that steps should be taken to minimize the loss and maintain it as a productive airport with a minimum number of employees.

“Today, the Mattala Airport is being maintained with the money earned by Katunayake Bandaranaike International Airport (BIA) and the loan of USD 210 million obtained from China for the construction of this airport is to be repaid in installments,” the Minister said.

Therefore, he said alternative proposals are being considered to increase the revenue of the Mattala Airport.