China Eximbank provides $88.66 million buyer’s credit loan for Colombo Lotus Tower Project (Linked to Record ID#96152)

China Eximbank provides $88.66 million buyer’s credit loan for Colombo Lotus Tower Project On September 17, 2012, China Eximbank and Sri Lanka’s Telecommunications Regulatory Commission (TRC) signed a $88.66 million buyer’s credit loan (BCL) agreement [No. BLA-201207] for the Colombo Lotus Tower Project.

The loan’s final maturity date is July 21, 2024.

The total cost of the Colombo Lotus Tower Project was $104.3 million and proceeds of the BCL were to be used by the borrower to finance 85% of the project cost. The Government of Sri Lanka issued a sovereign guarantee in support of the BCL.

The loan’s outstanding amount was $49.53 million as of December 31, 2018, $40.66 million os of December 31, 2019, $31.79 million as of December 31, 2020, and $22.93 million as of December 31, 2021.

The purpose of the project was to establish a multipurpose television and telecommunication tower with a leisure park in Colombo.

It involved the construction of a 350 meter high multifunctional telecommunication tower with a floor area that includes radio and TV transmission, restaurants, hotels, conference & exhibition facilities, and a leisure park. Upon completion, the Colombo Lotus Tower or ('Nelum Kuluna') was expected to be South Asia's tallest tower.

Lotus Tower's main revenue sources were expected to be tourism and antenna leasing.

It was expected to function as a radio and television broadcasting antenna ISDB-T and proposed DVB-T2 support structure for 50 television services, 35 FM radio stations, and and 20 telecommunication service providers. It was also expected to house a variety of tourist attractions.

A Chinese consortium — consisting of China National Electronics Import and Export Corporation (CEIEC) and Aerospace Long-March International Trade Co.Ltd. (ALIT) — initially agreed to jointly implement the project on a turnkey basis.

However, ALIT left the consortium in August 2015, entrusting its partner CEIEC to act solely on its behalf to fulfill the contract with the TRC. Beijing Construction Engineering Group Co., Ltd was also involved in implementation. A foundation stone laying ceremony took place on January 20, 2012. Construction began on November 12, 2012.

The originally anticipated project completion date was October 31, 2017 but it was later pushed back to December 31, 2018. An official opening and fireworks ceremony for the Lotus Tower took place on September 16, 2019.

However, the ‘first stage’ of the tower was not even partially opened for use until September 15, 2022 when the observation deck and a few areas in the tower were opened.

The second stage of the tower (which includes e-sports centers and a digital museum) was scheduled for opening in November 2022 and the third stage of the tower (which includes a 9D cinema and a revolving restaurant) was scheduled for opening in March 2023. The Chinese Embassy in Sri Lanka claims that the project created jobs for more than 1000 local workers.

However, the project was plagued by implementation delays, financial mismanagement allegations, and debt repayment challenges.

Sri Lanka's Ports and Aviation Minister Arjuna Ranatunga claimed that construction was taking place on land that belongs to the Ports Authority without proper government approval.

Also, President Maithripala Sirisena alleged in 2019 that ALIT misappropriated 2 billion rupees (approximately $11 million) in a deal to work on the construction of South Asia's tallest tower.

Then, in 2020, China Eximbank and TRC signed a debt rescheduling agreement (captured via Record ID#96152) that extended the loan’s maturity date by two years: from July 21, 2024 to July 31, 2026.

In July 2022, the Financial Times reported that the tower “was designed to look like a giant lotus bud about to burst into flower, [and] it was intended to be a metaphor for the flourishing of Sri Lanka’s economy and the 'brilliant future' of the bilateral co-operation between Beijing and Colombo.

Instead, the tower has become a symbol of the mounting problems facing China’s overseas lending scheme, the ‘Belt and Road Initiative.' The construction suffered from lengthy delays and an allegation of corruption [leveled] by Sri Lanka’s then-president Maithripala Sirisena against one of the Chinese contractors.

Now, three years after its official launch, the tower’s amenities including a shopping mall, a conference center, and several restaurants stand either unfinished or largely unused while outside on the streets outrage over Sri Lanka’s financial mismanagement has boiled over into popular protests. ‘It is something we would have done better without,’ says Athula Kumarasiri, a bookshop owner, as he motions towards the tower. ‘What is the need for this?

It is a complete white elephant.' In September 2022, Colombo Lotus Tower Management Company said that the delayed opening of the tower would lead to significant financial losses. ‘We can’t keep this closed. The maintenance costs are huge,’ Chief Administrative Officer Prasad Samarasinghe told reporters.