Land acquisition in the North-East

Tenders bend hotel industry progress

By Sulochana Ramiah Mohan

In the backdrop of Tourism Ministry’s efforts to achieve the target of 2.5 million tourists by 2016, hotel construction work is said to be at a standstill particularly in the North and East, due to protracted tender procedures.
“The tender and land acquisition (lease) procedures have been delayed for nearly 5 months from the time of call, and how could Sri Lanka fulfill the requirement of 58, 000 rooms by the year 2016 to accommodate tourists?” hoteliers question.
Land in Kuchchaveli and most parts of the North and East were to be leased and tenders have been called about six months back, but there is no response.
Based on the current average length of stay of a tourist, there is a need of approximately 50,000 rooms by the year 2016. Currently 14,700 rooms are in operation and in order to achieve the 50, 000 target, there has to be approximately 35,000 rooms in the next six years from 2010 to the end of 2015 at the rate of 5,800 rooms per year. If an average size of a new hotel is going to be 100 rooms, it translates to 58 new hotels every year for the next six years.
In order to build 35,000 rooms, at an average cost of Rs. 8 million per room, the investment required would be approximately Rs. 280 billion over six years or Rs. 46 billion per year. In Dollar terms, at current exchange rate that equates US$ 2.45 billion or over 400 million Dollars a year and the question is “Where is the financing going to come from?
Minister of Tourism Achala Jagoda admitted that there are certain issues and delays connected with Kuchchaweli land allocation. “The whole land acquisition procedure for development comes under the purview of the Govt Agent of Trincomalee and we are going to look into hotel related lands that are getting delayed. However, hope to finalize it soon,” he said. He also added that the procedure may take its course due to clearances required as per Coastal Conservation Department regulations. The rules and regulations of the Urban Development Authority, Local Authority, Wild Life Development, Archaeological Department, Irrigation Department, Fisheries Department and Forest Department are to be compiled. The minister said he will soon call for a meeting with relevant authorities to settle the issue and quickly resume the initial stage of tourism development projects in the concerned areas.
The Kuchchaveli land on lease was called nearly six months ago and proposals for 500 rooms were submitted. But, some of them who submitted their proposals have not been called upon or given any information of its progress, according to sources. Some investors say, they were only called to inspect, and there is hardly any correspondence after submitting relevant documents.

On the fast track

Trincomalee GA, Major Gen T T R de Silva denied any delays in procedures. “This job doesn’t involve just me and my office. There are other related areas that should have a say in the final process. There was a delay due to the presidential election and other issues that followed later”.
The land on lease was awarded last year (in September) and there were several lessors. The first slot consists of 26 blocks, and there are altogether 43 blocks. “Some hoteliers uninformed, may have not submitted proper documents. The first batch is ready to commence construction work in 2-3 weeks when it’s finalized and notified,” he said. The Kuchchaveli land on lease is for 30 years, and the President would decide the next step. We are well coordinated and perform the job perfectly.”
Minster Achala Jagoda speaking on the Kalpitiya Project of 14 islands said, “Two tenders were called and finalized. The construction of hotels is in progress, and five more tenders called would be finalized by March this year”. These tenders have been called three months ago.
Passikudah land tender was called about 15 months ago, and the proposals were submitted and finalized. “There was no progress after acquiring the land from us. We finally gave them a deadline till December 31, 2009 to commence the project by March 31st 2010. We have given them a time frame to complete the hotels consisting of 1000 rooms in Pasikkudah, within two years from now.” the minister asserted.
The minister also said tourism development is on the fast track and all delays pertaining to constructing new hotels will be administered seriously to meet the target.
According to Sri Lanka Tourism Development Authority (SLTDA), an area of approximately 500 acres has been identified for tourism development purposes in the Trincomalee district. The land bordering the beach, situated in Kuchchaveli, North of Nilaveli beach is a conceptual zoning area, currently devised for SLTDA with the assistance of Urban Development Authority (UDA). The resort will be developed jointly by the Government Agent (Trincomalee) and SLTDA.
The private sector has expressed keen interest to develop Kuchchaveli. According to applications received to date, 3000 to 5000 rooms would be in operation by 2011 - 2013. SLTDA has already finalized the conceptual resort design of Sri Lanka Institute of Architects (SLIA). Preliminary work is underway to prepare an Environmental Impact Assessment (EIA) for the entire resort.