MP Patali Champika Ranawaka says the Colombo Lotus Tower will require to earn a daily revenue of US$ 41,000 for the next 5 years in order to cover the loans obtained for its construction.
MP Ranawaka told the media that a total of US$ 105 million was spent on the tower, a further US$ 56 million is required to settle the loan in next five years
Stating that it is a difficult position, MP Patali Champika Ranawaka added that such a tower should have been constructed in a country that earns huge revenue.
“It’s a waste for a country like us who can’t afford it, we need to talk separately about the corruption that took place in this” MP added.
No proper feasibility study
The proposal to construct the Colombo Lotus Tower estimated the total cost of the project at Rs 9.3 billion at the time, while it did not include land.
There didn’t appear to be a “proper assessment” of the income that could be generated once the facility was completed as well.
The required “proper” feasibility study was never conducted and a special Government audit in 2019 found only financial feasibility carried out by the Project Consultancy Unit (PCU) for free.
The interest on the China EXIM Bank’s loan was four percent plus prevailing LIBOR, but the financial feasibility calculated borrowing cost at 3.5 percent, causing a significant understatement of over Rs. 500 million.
The report hadn’t considered loan interest for the period of disbursement; neglected to include management and commitment fees for unutilized loan amounts; understated insurance costs by over Rs. 680 million; and overstated the present value of budgeted income by more than Rs 2 billion.
The Colombo Lotus Tower remains on the list of Sri Lanka’s failed taxpayer-funded and multibillion rupee vanity projects that have direct political backing.
The Lotus Tower at present is owned by the Telecommunication Regulatory Commission of Sri Lanka (TRCSL) but managed by the Lotus Tower Management Company (Pvt) Ltd (LTMC) under the Treasury, with an independent Board of Directors.
The Treasury has now allocated Rs 500 million to Lotus Tower Management Company (Pvt) Ltd (LTMC).
The Colombo Lotus Tower has been rebranded as the epicenter of technology and entertainment with expected income chiefly from rent. (NewsWire)