MP Patali Champika Ranawaka says the Colombo Lotus Tower would require earning a daily-revenue of US$ 41,000 for the next five years in order to cover the loans obtained for its construction.
At a meeting with the executive members of the Sri Lanka Parliamentary Journalists’ Association recently, MP Ranawaka said that a total of US$ 105 million was spent on the tower and a further US$ 56 million is required to settle the loan in the next five years.
” It’s a waste for a country like ours. We need to talk separately about the corruption that took place in this,” the MP said.
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.