Port City Project ECBA

EXECUTIVE
SUMMARY

SUPPLEMENTARY ENVIRONMENTAL IMPACT ASSESSMENT STUDY: COLOMBO PORT CITY
DEVELOPMENT PROJECT
Introduction
This Supplementary Environmental Impact Assessment (SEIA) study is carried out for the
expansion of the reclamation area of the Colombo Port City project from an area of 200 ha, which
was approved by the Project Approving Agency, the Department of Coast Conservation and
Coastal Resources Management, subsequent to an Environmental Impact Assessment (EIA) study
that was subject to public comments via a notice placed in newspapers on 11th June 2011, to an
altered design comprising an area of 269 ha, together with the impacts of extraction of sand from
the identified borrow areas and quarry material required for the entire landfill and protective
works. The above‐mentioned EIA for 200ha did not cover environmental impacts of sand
extraction as a separate and inconclusive Initial Environmental Impact Assessment (IEE) process
was adopted by the Sri Lanka Ports Authority in this respect, and this lacuna is being addressed via
this SEIA study.

Notwithstanding the EIA of 2011 for 200 ha being approved after the public review process, this
SEIA study covers the entire reclamation footprint and the extraction of quarry material and sand
required for the entire project.

The Project Proponent to this SEIA, the Ministry of Megapolis & Western Development, appointed
the Central Engineering Consultancy Bureau (CECB) as Lead Consultant to execute this SEIA study.
This SEIA is guided by the following important principles:
(a) Terms of Reference for the SEIA issued by the Department of Coast Conservation and Coastal
Resources Management (CCD) to the Ministry of Urban Development, Water Supply &
Drainage on 30th August 2015 titled: “Terms of Reference For the Supplementary
Environmental Impact Assessment Report of the Reclamation, Dredging, Construction of
Protection Structures such as Breakwaters and Revetments and Extraction of Sand and
Quarry Material required for reclamation and protection works for proposed Colombo Port
City Development Project”
(b) The Terms of the Agreement entered into between the Ministry of Ports and Shipping, acting
on behalf of the Government of Sri Lanka (GOSL), and CHEC Port City Colombo (Pvt) Ltd (the
Project Company), signed on 16th September 2014 and extended on 17th September 2015
(hereafter referred to as the “GOSL Agreement”) and the Concession Agreement attached to
the said GOSL Agreement as a binding annexure (hereafter referred to as the “Project
Agreement”), stipulates inter alia that the Sri Lanka Ports Authority (SLPA)/GOSL is
responsible for securing the required environmental permits and approvals.
(c) The Decision of the Cabinet of Ministers on 17th June 2015 that authorized the UDA to step
into the role of SLPA and, pending the required legal formalities being finalized, the Ministry
of Urban Development, Water Supply and Drainage would to take responsibility for
implementing matters connected to this SEIA as the Project Proponent. With the UDA being
assigned under the Ministry of Megapolis & Western Development, this Ministry has now
taken over such responsibilities.
(d) In terms of the Project Agreement, the Colombo Port City will be developed in two distinct
phases, with required environmental approvals obtained in two phases as well as follows:
CECB ‐ SEIA Report – Proposed Colombo Port City Development Project‐ December 2015 ES ‐ Page 1

 Phase 1 EIA: For Reclamation, sand extraction and construction of coastal structures to
protect the landfill and landscaping aesthetics for the proposed Colombo Port City. This
SEIA is a continuation of work connected to Phase 1 and being carried out as a
supplementary to the approved EIA for 200 ha. Reclamation works will re‐commence
upon this SEIA receiving required approvals.
 Phase 2 EIA: Construction of the buildings and infrastructure of the Port City. This EIA
study will be based on the concept master plan and infrastructure requirements
submitted to the UDA (and described in this SEIA in Chapter 2). The construction of
permanent structures/built environment on the landfill will take place only upon
receiving necessary approvals for the Phase 2 EIA study.

Origins of Colombo Port City

Expansion of the Colombo Central Business District (CBD) by reclaiming the sea was originally
proposed under the Government‐initiated Western Region Megapolis Regional Structure Plan
dated July 2004, prepared by the Singapore based urban planning consultants, CESMA
International Pte. Ltd. According to the “Colombo Core Area Plan” of the Plan (referred to as the
CESMA Plan), the Colombo CBD was to be expanded to release lands for real estate development
by:
(a) Reclaiming 145 ha of land from the sea to the South of the proposed Colombo South Port
breakwater by 2010 (i.e. the current location of Colombo Port City)
(b) Relocating port related activities at the existing Jaye Container Terminals (JCT) to the
Colombo South Port, releasing around 76 ha of land for real estate development
(c) Creating 221 ha (145ha+ 76ha) of new waterfront lands adjacent to the Colombo Port,
which includes a marketable land extent of 139.5 ha, to meet the real estate needs of
Colombo CBD up to 2030

In comparison, the Colombo Port City project proposes to create a total land area of 269 ha
including a marketable land area of 173 ha. Therefore, the marketable land envisaged under Port
City is 24% higher than the 139.5 ha land extent envisaged under the CESMA Plan, within the
same geographic area. Moreover, the CESMA Plan envisaged the South Port reclamation and JCT
area developments to commence in 2010 and meet the city’s land requirements for 20 years till
2030. The Colombo Port City development plan is intended to span a 25‐year period ending in
2040. Accordingly, under both plans, the average land extent to be released for development
works out to around 7 ha per annum.

An important aspect that should be noted when comparing the CESMA Plan and the Colombo
Port City Project is that, under the latter, the entirety of the proposed new land area is to be
created by reclamation without any interference with and/or relocation of existing infrastructure,
whereas under the CESMA Plan part of the new land was to be created by relocation of existing
facilities at the Jaye Container Terminals

Therefore, creating a landfill for real estate development adjacent to the Port of Colombo under
the Colombo Port City Project is not a new concept. It is an initiative that falls within the broad
parameters of the master plans developed by CESMA approximately 11 years ago, which are
currently being updated.

If a large‐scale reclamation project was to be undertaken with minimum impact to the coast to
capitalize on the advantage of the site being an area where sand would naturally accumulate, the
only location technically and financially feasible is within the shadow of the southern arm of the
breakwater of the newly built Colombo South Port Project. The new South Port breakwater,

funded by the ADB, was the most challenging Coastal/Port Engineering project undertaken in Sri
Lanka. Apart from the breakwater extending 1.5 km perpendicular to the beach, thus acting as a
protective barrier to Port City, dredging for the South Port involved an area of about 820 ha and
the reclaimed area covered about 340 ha. This SEIA report will demonstrate that Colombo Port
City developments covered under this SEIA has far less environmental impacts than the Colombo
South Port.

Colombo Port City – A Collaboration between the Project Company and Government of Sri
Lanka

The CPC project was initially conceived as a public sector/Government funded project to be
undertaken by The Sri Lanka Port Authority (SLPA). Consequently, the SLPA commissioned at its
own cost an “Initial Technical Feasibility Study” in April 2010 for the reclamation of land South of
the new breakwater. Around June 2010, an EIA study was commissioned by SLPA also at its own
cost through the University of Moratuwa (UoM) for a reclamation area of 200 ha. In October
2010, the UDA completed a master plan study based on the above mentioned Initial Technical
Feasibility Study and submitted a Project Proposal to the SLPA for consideration.
In April 2011, based on an unsolicited concept proposal submitted by China Communications &
Construction Company (CCCC), the parent of the Project Company, the Government of Sri Lanka
(GOSL) decided to not to commit public funds to construct the Port City Project and proceeded to
negotiate with CCCC to implement the project entirely as a foreign direct investment, with no
financial guarantees by the Government on the investment.
After a 2 ½ year period of negotiation with a Standing Cabinet Appointed Review Committee
(SCARC) and a TEC represented by 16 Government organizations, on 16th September 2014 an
Agreement (referred to hereafter as the “Project Agreement”) was entered into between the
Project Company and the Secretary to the Ministry of Highways, Ports and Shipping (acting for
and on behalf of the GOSL). The Agreement was signed and the project’s construction works
ceremonially inaugurated on the same day in the presence of the President of the Peoples’
Republic of China and the President of the Democratic Socialist Republic of Sri Lanka, during the
Chinese President’s State visit to Sri Lanka.
During the period leading to the signing of the Project Agreement and in terms of the Agreement
itself, the responsibility for carrying out the required environmental studies and obtaining the
required permits and consents in relation to the reclamation and sand extraction has been the
responsibility of the SLPA, and, in terms of Clause 3 of the above‐mentioned GOSL Agreement and
the Project Agreement annexed thereto, all rights, obligations and liabilities of the SLPA are
deemed as rights, obligations and liabilities of the GOSL.
The Project Agreement states that of the total marketable land area at Port City (i.e. land to be
sold or leased under applicable laws in Sri Lanka to third party investors for development after
allowing for public parks, roads and beaches) shall be no less than 170 ha. Of this, no less than 62
ha will be allocated to the GOSL/SLPA (to be replaced by UDA) and no less than 108 ha will be
allocated to the Project Company. It should be noted that the allocation of marketable land
between the Project Company and GOSL would be carried out on an equitable basis where the
Project Company will first select a marketable land extent of less than 10 ha and then the
Government will select a similar extent. This process of alternative selections will be repeated
until such time one of the Parties has reached the maximum amount of marketable land to be
allocated to that Party. Therefore, the marketable lands allocated between the Government and
Project Company will be in non‐contiguous blocks. Note that the public areas such as roads, parks,
beaches will be under the GOSL/UDA/CMC

In consideration of receiving its share of the commercially developable land (63 ha with a current
market value of Rs 225 billion), the SLPA/GOSL would be responsible for ensuring the supply of
utilities (water, power, sewerage) to the boundary of the reclamation site at a suitable connection
point and with sufficient capacity as and when needed and improve the transport infrastructure
leading to the site. This is a common arrangement in priority investment projects where the
developer meets the cost of all common infrastructures within the site and the Government
agencies concerned provide infrastructure connections to the periphery (e.g. industrial parks,
housing projects have been implemented in Sri Lanka on this basis)

Objective of the SEIA Report – The two‐Stage EIA Process

Several important issues were raised in the Initial Technical Feasibility Study of 2010 and the EIA
study of 2011 for the 200 ha reclamation. They were:
(a) The proposed Port City has to be developed in two stages. The first stage will be the landfill,
the offshore breakwater and the coast protection for the protection of the landfill. The
Second Stage will be the planned development of Port City with all infrastructure and support
services
(b) If there is a modification to the overall design, then environmental consultants would be
commissioned to present an addendum to the EIA to confirm that the changes and resultant
environmental impacts will not make a significant change to the findings of the initial EIA
completed for 200ha. If changes to the design are significant then a fresh EIA will be carried
out.
(c) A detailed EIA will have to be carried out for the infrastructure development plan of the Port
City and the proposed developments on the reclaimed land.

The objective of this Supplementary EIA is a consequence of (b) above: that is, to capture the
design changes since the completion of the EIA of 2011 and to subject to public scrutiny the aspects
covered in the Addendum to the EIA of 2013 and subsequent changes. It is noted that the
Addendum to the EIA of 2011 was not open to public comments in 2013.

Varying approaches can be undertaken for environmental studies. It is the prerogative of the
Government policy makers led by the Project Approving Agency (PAA) to decide on the scope of the
environmental studies. Accordingly, the respective Government appointed review committees
evaluating the Port City project recommended to the Cabinet of Ministers to adhere to a 2 stage
EIA process for Port City, and accordingly provision was made for such a course of action in the
Project Agreement signed between the GOSL and the Project Company. Therefore, as mentioned
earlier, Colombo Port City will be developed in two distinct phases, with required environmental
approvals obtained via two related EIA studies.

This SEIA is therefore to be read as a Supplementary to the approved EIA of 2011. The Phase 2 EIA
for the construction of the buildings and infrastructure of the Port City, including traffic impact
assessment will commence in parallel or immediately after completing this SEIA study.

Environmental Approvals leading to the current SEIA

The Department of Coast Conservation & Coastal Resources Management (CCD), as the Project
Approving Agency (PAA), made the EIA report of April 2011 for 200ha available for public
comments as required under Section 16 Sub section 2(b) of the Coast Conservation Act No 57 of
1981. In this respect, the CCD placed advertisements in major newspapers on 21st June 2011 in all

three languages informing the availability of the report for review at 11 locations including the
CEA, UDA, CMC, GSMB etc. Public comments received were responded to as necessary.

In view of the investment proposal submitted by CCCC, in 2012 proposing a reclamation area of
233 ha, an Addendum report to the 2010 EIA was prepared by UoM and submitted via the SLPA to
the CCD in September 2013. The main objective of the Addendum report to the EIA was to inform
the PAA of a “deviation which has taken place to expand the project from 200 ha to 233 ha…”.
This was accepted and on 23rd October 2014, the CCD issued a “Permit for a Development Activity
under Part III – Section 14 of the Coast Conservation & Coastal Resource Management Act No 57
of 1981, for reclamation, dredging and construction of breakwaters, revetments”. This permit
contained 42 conditions of which condition No 40 states ”A Separate approval should be obtained
from the CEA for extracting sand from the offshore to be reclaimed the proposed near shore area
and submitted to this department prior to the commencement of the construction.”

In parallel to the above process, the SLPA commissioned NARA to carry out two IEE studies for 2
sand borrow areas for which the GSMB issued exploration licenses to SLPA for purposes of
securing sand for the reclamation works to be carried out under the Port City Project. The CEA as
the PAA for this study provided the Terms of Reference for the IEE. Obtaining the required
consents for the fishermen’s compensation program was a pre‐requisite for the CEA to grant the
necessary permits to dredge sand. Despite almost a year of attempting to obtain the required
consents, the SLPA encountered several roadblocks in fulfilling this task. In the circumstances, the
SLPA could not obtain the required sand extraction permits from the CEA for the identified
borrow areas as stipulated in the development permit of the CCD and in terms of the Project
Agreement, which assigned this responsibility to the GOSL/SLPA.

The Project Company commenced sand extraction and reclamation works on 16th September
2014 consequent to the GOSL’s wish to inaugurate the project at the time of the State visit by the
President of China and in terms of Clause 4.1 of the Project Agreement, which states that “on and
from the date of this Agreement, the Project Company shall design and carry out the reclamation
works in accordance with the Concession Agreement”. In addition, the Project Company was
granted written permission by the SLPA to dredge the Colombo Harbour navigation channel
pending (as understood by the Project Company) the finalization of the two IEE studies by NARA
for identified sand borrow areas.

Under the above circumstances, where in terms of Article 12.1 of the Project Agreement the
obligation to obtain the necessary/applicable licenses and permits is a responsibility of the
SLPA/GOSL, the Project Company has taken the position that sand extraction and reclamation
works commenced on 16th September 2014 on the basis of provisions contained in the Agreement
itself and on the basis of written clearances provided by the SLPA.

Subsequently, the new Government elected on 8th January 2015 appointed an Evaluation
Committee to review the Port City project on 30th January 2015. On the basis of certain
conclusions reached by this Committee (without any consultation with the Project Company), on
4th March 2015, the Cabinet of Ministers made a decision to suspend the construction works of
the Port City Project. This decision was communicated to the Project Company by the Secretary
Ministry of Ports, Shipping & Aviation on 6th March 2015.

The said suspension is operative to date. During the period of suspension, the Government has
made the following decisions, in consultation with the Project Company where necessary:

(a) The GOSL Agreement of 16th September 2014 would be amended to inter alia permit the
UDA to step into the role of the SLPA and the end date of the said GOSL Agreement would
be extended by 6 months to inter alia facilitate the said transition
(b) The necessary amendments to the Project Agreement shall be effected via a tri‐partite
agreement between the GOSL represented by the Ministry in charge of the UDA (the
Ministry of Megapolis and Western Development), the UDA and the Project Company.
(c) A Supplementary Environmental Impact Assessment (SEIA) shall be carried out for
expansion of the reclamation area from 200 ha to an altered design of 269 ha together
with the impacts of extraction of sand from the identified borrow areas and quarry
material required for the altered design.

This SEIA is a consequence of the aforesaid decisions taken by the Government.

Objective and Justification of the Project

The location of Port City takes advantage of twin attractions of proximity to the Colombo CBD and
oceanfront living in a carefully master‐planned area. This is a tried and tested formula by city
centres that aspire to position themselves as destinations for tourism, living, working, shopping
and entertainment. Also, the Colombo CBD has limited oceanfront lands available for
development, especially in view of the land area facing Galle Face, formerly occupied by the
Defence forces, now being allocated to Shangri‐La and ITC Hotels.

Presently, Colombo is not a “Destination”, but primarily a transit point for tourists. The average
stay by tourists is roughly 1.6 nights for Colombo, which is too low by international norms. (In
comparison, average stay at a beach location of a typical tourist to Sri Lanka is around 5.5 nights).
The lack of vibrancy of Colombo in terms of shopping and entertainment is a significant deterrent
to attracting South and East Asian tourists to Sri Lanka. Sri Lanka’s tourist arrivals being impacted
by cyclicality (with higher arrivals being recorded during the traditional winter season) can be
largely attributed to Colombo not being a sought after tourist destination.

Investment Details & Strategic Objectives of Colombo Port City

The objectives of Colombo Port City as formulated by the Project Company are as follows:
 To foster integrated oceanfront living within the CBD to provide high quality of life through
world‐class office, residential and recreational spaces that will attract tourists,
professionals, entrepreneurs, managers and retirees.
 Position Colombo as the most liveable city in South Asia
 To create a regional business hub, a city with a distinct brand with high quality public
spaces and infrastructure facilities, attractive to local and international developers and
investors
 To create a tourism hub with a unique character that reflects the distinctive local culture
and the existing urban fabric
 To design and build a sustainable urban city space that adapts to local climate, creates a
comfortable micro‐climate and make efficient use of energy resources

Colombo cannot become a destination that appeals to the international business travellers or
tourists with ad‐hoc and fragmented developments and without distinct positioning. Therefore,
Colombo Port City provides an opportunity for the old and historic part of Colombo’s central
business district to seamlessly interface with a modern planned metropolis like no other in South
Asia.

The investor in Port City, CCCC, is a Fortune 500 (No 187) and public listed company in Hong Kong
and among the world’s largest construction and real estate companies with assets of over $100
billion. It is also the world’s largest dredging company having undertaken iconic land reclamation
projects in China and the main dredging contractor for the world’s 2 largest reclamation projects –
the new airport projects at Hong Kong and Macau. The total foreign direct investment in the
reclamation stage of the Port City envisaged at around $1400 million. CCCC has plans to
undertake further investments in a real estate project in Port City upon the completion of the
phase 1 investment in reclamation and the phase 2 EIA.
The Project Company has also hired world‐renowned international consultants working together
with local specialists to advise on various aspects connected to the development: For e.g: Atkins
of UK: Master plan review; Aecom of USA: Utility design, road design and landscaping; Sweco of
Sweden: Overall master planning; Jones Lang LaSalle (JLL) and CB Richard Ellis (CBRE) of UK:
financial and marketing pre‐feasibility and CDR International of The Netherlands: technical review
of designs of the contractor.
The investment required for the breakwater and other protective structures (both submerged and
above‐water) of the Port City Project is around $225 million. Therefore, in order to recover the
cost of the breakwater and the allocation of 63 ha of marketable land together with 96 ha of
common area land to the Government (a total of 159 ha or 59% out of 269 ha), the Port City
project, if made smaller, would not be financially viable to the investor. Stated another way, the
Project Company will retain only 41% of the reclaimed land extent for marketing to developers
(110 ha of non‐contiguous land).
It is noted that Port City will have around 45 ha of public parks (9 times the size of Galle Face
Green) anchored by a 22 ha Central Park and a well‐protected beach and so called lagoon (water
area between breakwater and beach) suitable for swimming and water recreational activities –
currently not available to residents in Colombo CBD. The reclaimed land area is also a function of
the length of the Colombo South Port breakwater and takes advantage of the full length of the
shadow of the breakwater.

Future Developments
Permissible developments within the 269 reclaimed land area will be In keeping with Sri Lanka’s
planning and building regulations. Developments proposed under the concept master plan for
Port City submitted to the UDA for preliminary planning clearance include commercial
establishments, residential, health and educational institutes, small businesses and services, arts
and entertainment, community developments, marina and convention facilities. No industrial
activities will be allowed within Port City.

Colombo Port City will be implemented over a 25‐year period. There is no future addition or
expansion envisaged beyond the 269 ha area after the reclamation works covered under this SEIA
study is completed.

The Hon. Attorney General has opined that the UDA cannot be a signatory to the Project
Agreement replacing the SLPA as it lacks the legal capacity under the UDA Act. Upon creation of
new land by reclamation of the sea, the entire Port City land will be gazetted under the Sri Lanka
Lands Ordinance, a subject matter falling under the purview of His Excellency the President in
terms of the said Ordinance. The UDA could therefore declare the land reclaimed by the Port City
Project as an “Urban Development Area” only after the reclamation process is over and a
declaration is made under the Lands Ordinance.


Accordingly, the sovereign rights of the Government of Sri Lanka including the right of eminent
domain, is applicable within the reclaimed land.

Outline of Studies Carried Out
A comprehensive review of the modelling work and preliminary designs carried out for the
Feasibility Study of Port City were undertaken during the preparation of this SEIA. This includes
separate comprehensive 2D and 3D physical model test studies and numerical modelling studies,
which includes interpretation of coastal evolution and siltation due to proposed development,
sediment transport modelling considering dredging and reclaiming and interpretation of
contaminant concentration at the Beira Lake outfall with the proposed mitigation measures.
In addition, ground investigations have been carried out over a period of more than two years to
better understand the technical requirements that would need to be taken into account in the
implementation of the project. In summary, the following engineering studies have been carried
out and reports compiled during the feasibility and environmental study phase of this project
using the services of local and international experts/organizations:
 Wave climate modelling – LHI Coast & Water (LHI)
 Hydrodynamic modelling (LHI)
 Wave disturbance modelling (LHI)
 Sediment transport modelling (LHI)
 Sediment dispersal modelling (LHI)
 Shore profile survey (LHI)
 2‐D Stability physical model Test on Offshore Breakwater and Revetment for Marina –
Tianjin Research Institute of Water Transport Engineering (TRIWTE)
 3‐D Physical Model study Test ‐ South Part and North Part – Nanjing Hydraulic Research
Institute (NHRI)
 Analysis (numerical modelling) of Coastal Evolution and Siltation – TRIWTE
 Numerical modelling of Water Exchange – TRIWTE and LHI
 Ground Investigations – Forth Harbour Design Institute
 Water quality sampling and analysis (NARA)
 Assessment of inland quarry material availability, permits, transportation routes, impacts
etc. (GSMB Technical Services)
 Model and ecological studies at reclamation area (University of Moratuwa)
 Impacts on Beria Lake outfall and storm water drain outlets impacts due to the proposed
development, including 3D numerical model (CDR International, Netherlands)

Other important study reports this SEIA builds on include:
 Colombo Port Efficiency & Expansion Project, Environmental Impact Assessment of 2005
carried out by Scott Wilson.
 EIA Study for Proposed Colombo Port City (2011) and Addendum thereto (2013) by the
University of Moratuwa,

Summary of Important Findings on Coastal Erosion

The South Port Project breakwater extends 2km in length perpendicular to the coast. This can
potentially create erosion north of Colombo. However, monitoring over the last 4 years or so has
confirmed erosion has not taken place. This is mainly because of sediment supply from Kelani

River, discharged north of the Colombo Port. The construction of Colombo South Port had
increased the wave shadow, extending it northwards. As a consequence wave conditions in this
area had become calmer, and the shoreline between the Colombo South Port and the Kelani River
have remained stable after construction of the Colombo South Port

The Kelani River is believed to contribute some 100,000 to 200,000 m3/year to the sediment
budget of the area. Historically this is believed to have been much higher, perhaps 400,000
m3/year, but has declined due to sand mining and development upstream. As a consequence
there has been ongoing erosion of the coast to the north of the Kelani. Therefore, since Port City
is in the shadow of the Colombo South Port breakwater, it has no impact on coastal erosion north
of Colombo Port.

The coastal stretch south of Colombo is stable with very little seasonal changes. The net longshore
sediment transport along the west coast of Sri Lanka is predominantly directed towards the north
as a result of the wave climate (South‐West monsoon sea waves and swell). Transport rates have
been dominated by swell waves, with sea waves contributing little net transport. Most of the net
transport occurs during the southwest monsoon season. However during the NE monsoon the
sediment transport (as a result of waves from North West) is usually directed towards south for a
limited period. Therefore, Port City has no impact on erosion South of the Colombo Port

Moreover, when consider the shoreline change with this sediment transport rate for last 10 years,
there is no significant accretion or erosion in the coastal stretch north or south of Colombo Port.
The changes of shoreline of selected locations over the last 10 years corroborate this fact.

When dredging is taking place for sand, material must be taken away from the active dynamic
zone, where waves do not have an influence on the seabed. In the case of Port City, dredging
areas have been identified on this basis. It must be emphasised however that the change of wave
climate due to natural reasons may lead to movement of sand which can take place anywhere
around the island. Accordingly, studies carried out and extensively described in this SEIA report
and annexes clearly establish that Port City will not cause coastal erosion.

Four years of monitoring of the Colombo South Port Project has illustrated that the turbidity
represented by total suspended sediment near the Kelani River outfall has been always greater
than the mobile points around the dredging and reclamation sites (3 mobile station). This means
that the natural environment has a greater impact on the ecosystem than arising from dredging
and reclamation. Sediment laden plume of the Kelani River can have an impact on ecosystem. It is
noted that the sediment‐laden plume from the Kelani River covers the South Port region during
heavy monsoon rainy weather.

Material Required to Construct Port City

To complete the Port City Project, a total of 2.83 mn cu m of quarry material and 65 mn cu m of
dredged sea sand will be required. All the quarries identified for the supply of quarry material are
either IML‐A or IML‐B grade quarries. Hence, such licensed quarries are bound to comply with the
environmental regulations during the operations. Port City will obtain quarry material only from
independent IML‐A licensed quarry suppliers who will individually obtain required local authority,
environmental and transport permits.

Sand is to be extracted from 2 areas designated by GSMB with exploration licenses EL/177 dated
21st June 2011 (Site 1) and Exploration License No: EL/281 dated 8th November 2013 (Site 2)

issued to the SLPA. Under this SEIA, environmental impacts have been ascertained for these sites,
which comprise a combined area of 100 sq. km (46 sq. km for Site 1 and 54 for Site 2) and a
dredge‐able/available sand quantity estimated at 112 mn cu. m (44 mn cu m for Site 1 and 68 mn
cu m for Site 2) or almost double the sand requirement for completion of Port City.

Supply of Quarry Material

A total of 11 different quarry sites with required approvals, located in Kaduwela, Hanwella,
Padukka, Delgoda and Divulapitiya area, have been surveyed for obtaining quarry material for
construction of necessary structures to protect the reclamation. According to GSMB Technical
Services estimates, the required quantity of Port City works out to around 43% of the quarry
material available at these sites. Furthermore, the 11 quarry sites represent around 7‐9% of the
total registered quarries in the Colombo and Gampaha districts. Consequently, the impact of this
project on the national quarry material requirement would be negligible and therefore no price
impact to the construction industry according to the GSMB Technical Services. It was revealed
during the GSMB study that most of the IML‐A category quarries are not operating due to lack of
demand.

Around 300 six wheeler trucks and 38 ten wheelers are to be used for transportation from the
quarry sites to the project site. Transportation shall be done through two sessions, avoiding peak
hours, and via six different routes to minimize traffic congestion.

The trucks shall be covered to avoid any spilling of transported material or release of dust to the
environment. Dust generation during the transportation via unpaved internal roads shall be
controlled by sprinkling water along the roads at regular intervals. Sprinkling water to wash
quarry materials loaded in trucks before unloading them at the stockpiling site shall minimize dust
generation during the unloading. The movements of the wet returning trucks may cause Spitting
mud along the road surfaces outside the project site. Washing the tires of the trucks, before they
are moving out of the project site shall control this impact.

There is facility for parking for about 75 trucks around the port gate without disturbing moving
vehicles along the road. As the gate will open at 7am, trucks will enter the stockpiling site through
the road inside the port, which also mitigates road congestion.

During the 6‐month period of construction of Port City from September 16th 2014 to March 6th
2015, prior to entering into supply arrangements with quarry owners, the Project Company’s
contractor ensured that the supplier had a valid Mining License and quantity supplied was within
allowable limits. Moreover, each quarry site was subject to inspection. The same practice will
continue upon the recommencement of construction of the Port City Project.

Dredging Methodology

NARA, who was commissioned by the Project Proponent to carry out the marine ecological
studies and socio economic impacts, and LHI, who carried out studies on shoreline/coastal
impacts, have recommended guidelines for dredging that are designed to minimize impacts on
the coastal area, ecology and income from fisheries. The important applicable guidelines for sand
extraction stipulated in this SEIA based on recommendations by NARA and LHI are as follows:
1. Use modern dredging methods. It is stated in the SEIA report that 4 modern Trailing
Suction Hopper Dredgers will be used in the dredging.
2. Dredging to occur 3km beyond the shoreline and at water depths of 15m or more. The

dredging at 15 m depths will ensure that there will be no impact on coastal erosion based
on nearshore activity and the 3km distances will minimize impacts on fishing routes and
fishing activities. Moreover the 3 km minimum distance will ensure no impact on “ma dal”
fishing.
3. Obtain no greater than 30% of total sand requirement (30% of 65 mn cu m) from SLPA
Site 1 and the rest from Site 2. This is due to Site 1 having sensitive fish spawning areas
4. Dredging depth to be limited to 2m from the surface of sediment on Site 1 and from site 2
dredging may occur at greater depths provided 0.5 m of sediment is preserved after
extraction
5. As much as possible, dredging has to be avoided in areas having fish spawning and unique
habitat.
6. Dredging to commence from Site 2 initially
7. Allow fishermen to engage in fishing within the allocated dredging sites by giving proper
notice in advance and after dredging work is done to re‐commence fishing. (This will be in
accordance with COLREG regulations issued by the International Maritime Organization)
8. Implement an income support and benefits program to fishermen (outlined in detail in
Chapter 5 of this SEIA report and summarized below)

Independent of this SEIA, as a mitigation measure, the Project Proponent, Ministry of Megapolis &
Western Area Development, has directed the SLLRDC to enter into an arrangement with the
Project Company to supply sand from the adjacent 100 sq km borrow area assigned to SLLRDC for
which environmental approvals have already obtained from the CEA for dredging sand in limited
quantities to meet the requirements of the construction industry. This borrow area is estimated
to have a dredge‐able sand quantity of 264 mn cu m, though subject to exploration studies being
carried out. It has been recommended as a mitigation measure in this SEIA that once SLLRDC
obtains required environmental clearances to dredge its site, dredging activities in Site 1 would be
reduced even further from levels mentioned above or curtailed altogether. On 19th November
2015, SLLRDC has secured concurrence from the CEA to dredge 4 mn cu m of sand based on the
approved EIA of November 2007. SLLRDC intends to make this quantity available for purposes of
Port City reclamation, pending carrying out further exploration to secure clearances from the CEA
for extraction of up to 70 mn cu m for use by Port City and SLLRDC’s own use in the future.

Assuming the sand available in the SLLRDC borrow pit is added as planned, the sand requirement
for Port City is only 17% of the dredge‐able sand available within the 3 designated borrow areas.
Considering an average dredging depth of 2 meters, the area to be dredged will be around 30‐40
sq. km out of a total area of around 100 sq km allocated for SLPA sites 1 and 2 (or around 30‐40%
of area). Assuming that the borrow area allocated to SLLRDC is added, thereby increasing the
dredging area to 200 sq kms, the dredging area will reduce to only 15‐25% of the total allocated
area. Accordingly, the mitigation measures suggested during sand extraction such as avoiding
fishing grounds and routes are feasible.

Summary of Environmental Impacts & Mitigation

To a substantial extent, environmental considerations have been incorporated into the planning of
the layout and the feasibility design process from its inception. This has allowed the early
identification of any environmental issues, which may impose constrains on the design. This
approach of “Mitigation by Design” has reduced the need for a range of specific mitigation
measures. The key findings from this SEIA study, potential impacts and solutions to mitigate these
impacts are summarized below:


1. There will be no reduction in fishing grounds in the reclamation area since this is not an
ideal habitat for fish breeding due to already silted conditions.
2. There will be some beneficial effects of using granite boulders and concrete elements for
protection works, as these will serve as suitable habitats for fauna and flora. Further,
these will provide shelter for benthic animals that inhabit reefs such as lobsters and some
fish. In addition these boulders will serve as habitats for coral organisms as observed in
the newly constructed breakwaters of the Hambantota port. Therefore, the populations of
such animal may increase.
3. Dredging will occur at or beyond the minimum stipulated depth of 15m to a maximum of
30m. Such dredging depth is greater than the depth of closure and therefore no impact on
the shoreline/coastal erosion.
4. A comparison was made of the workability of a Cutter Suction Dredger (CSD) and a Trailing
Suction Hopper Dredger (TSHD) working offshore during the monsoon and inter‐monsoon
periods. Based on the environmental and production considerations, TSHD was
considered to be the most environmentally friendly equipment for the reclamation. The
proposed methodology of the use of TSHDs limits the impact of turbidity.
5. As and when necessary, silt curtain will be installed to prevent silt migration. The silt
curtain will be formed by polyester‐ fibre textile sheets to be hanged from buoys and be
weighted down by steel chains. An opening will be provided to allow for navigation of
TSHDs and other construction vessels in and out of the reclamation site.
6. Sand dredging is expected to cause some temporary impacts by removing benthic fauna
and increasing turbidity as a result of an increase in suspended particles in the water
column. The proposed dredging area experiences turbidity conditions and existing
organisms are likely adapted to high turbidity levels. However, the above‐mentioned
restriction of the dredge depth is expected to mitigate impacts.
7. The dominant fish resources in the area are pelagic, transient species that are likely to
avoid unsuitable environmental conditions and return once normal conditions are
established in the long term. The area selected for dredging has previously been dredged
and as such is not a completely undisturbed habitat. As such it presents the best possible
option compared to alternate sites that may be in a less disturbed state.
8. Several modelling studies were carried out to represent Southwest monsoon, Northeast
monsoon and non‐monsoon periods. During this period, the number of simulations
performed was 21, which covers a period of 252 days. That is, each simulation was over 12
days representing 50 dredging cycles, carried out 21 times (21 days x 12days = 252 days).
Under this modeling frequency, all possible environmental conditions (monsoonal effects,
tidal effects, wind/wave pattern), dredging process & different stages of dredging,
relevant dredge sediment data were taken into consideration. A significant change of
sediment transport pattern has not been observed in the vicinity of the Port City
development. Clear sediment transport patterns are present in the surf zone and shallow
areas. Areas where the depth exceeds 16–18m do not show the existence of any
sediment transport, especially under sea wave conditions. It was observed from the
results that the concentration of suspended sediments level is less than 1.5x106 g/m3
(1.5 mg/l) for almost all cases. Although spreading is occurring up to certain extent,
concentration of the suspended sediment is less than 2 mg/l, which is insignificant.
Therefore, dispersion of fine sediment due to dredging operations should not have any
impact on the surrounding environment.
9. The satellite remote sensing images of the project area obtained in 2002 and 2013 were
digitally enhanced and compared. Although there have been minor fluctuations of the
shoreline, there has not been any significant change of the shoreline during these 11
years, even after construction of the Colombo South Port. The construction of the
Colombo South Port does not seem to have any significant impact on the evolution of the

shoreline, which had remained stable. It should be noted that the development of the
Port City could, from the perspective of hydrodynamics, be considered as an extension of
Colombo South Port. As such, the development of the Port City is not expected to cause
any significant change of the shoreline
10. A numerical model was built specifically for assessing the impact of Port City on the
discharge from the Beira Lake outfall. This assumed the elimination of current sewerage
discharge into the Lake will not be finalized by the Government prior to completion of
reclamation work of Port City. The final engineering design adpoted at the Beira lake
outfall will not block the outlet but will streamline the continuity of the discharge and
bring water further to the sea, improving dispersion and preventing any obstruction to the
Beira outlet. The apporach proposed in this SEIA has the additional advantage as it allows
for the formation of a beach close to Galle Face Green without obstructing the outlet.
11. Existing storm water drain outlets around the site have been identified and solutions have
been proposed to avoid any negative impacts for these drains.
12. Siltation intensity within the Port City is studied using the numerical model, considering
both the Southwest Monsoon and the Northeast Monsoon. It is concluded that the
average computed siltation intensity within the lagoon of the Port City will be around 30
mm per year, and normal maintenance dredging should be sufficient at the operation
stage
13. The Colombo South Port is an enclosed water area connected to open water by the
navigation channel. Since there will not be any change to the siltation intensity at the
navigation channel, it is not anticipated that there will be any change in siltation intensity
within the Harbour.
14. The mouth of the Kelani River is located about 4.5 km north of the Colombo South Port,
and it is within the computation domain of the numerical model carried out for this study.
From the change in the siltation intensity computed from the model, the construction of
Port City will not have any impact on the siltation rate at the Kelani River mouth.
15. The construction of Port City on the southern side of the Colombo South Port will not
cause any changes the hydrodynamics and sediment transport of the Colombo Harbour,
the Kelani river outfall and the northern coastal area. The impact is considered as low.
16. Since the Port City is to be constructed on the southern side and in the shadow of the
main east‐west breakwater of the Colombo South Port, it will in no way affect coastal
erosion north of the Harbour. The coastline north of the Port City is already shielded by
the breakwater of the Colombo South Port, which has prevented any transportation of
sediment between the south and the north. As such, the construction of the Port City will
not change the pattern of littoral drift at the shoreline to the north.
17. The coastal stretch south of Colombo is stable with very little seasonal changes. The net
longshore sediment transport along the west coast of Sri Lanka is predominantly directed
towards the north as a result of the wave climate (SW monsoon sea waves and swell). The
comparison of the seabed profile between 2008 and 2012 indicates that the seabed close
to the shoreline is stable over the four‐year period. According to the results of the survey,
there is no obvious deposition close to the shore after the construction of the Colombo
South Port. It indicates that the influence of the breakwater on longshore sediment
transportation is not very obvious. Therefore, the reclamation work and the construction
of the breakwater of Port City are likely to result in similar insignificant bathymetric
change to the South of Colombo Port and the impact is negligible compared to the already
constructed the South Port.
18. Measurements of suspended sediments of the study area shows the TSS range of 2‐
25mg/l for different locations and different periods. Although spreading is occurring up to
certain extent, concentration of the suspended sediment is less than 2mg/l which is
almost equal to ambient concentration. Therefore dispersion of fine sediment due to

dredging operations doesn’t show any impact to the surrounding environment
19. The navigation channel of the Colombo South Port is located to the north‐west of the
port. Since navigation of vessels mainly depend on the wave conditions and bed level
changes of the surrounding area, hydrodynamic and sediment transport modelling carried
out in navigation channel showed no significant current increase or impact on the siltation
intensity and therefore no significant impact on vessel navigation.
20. The reclaimed land has no impact on regulation and control of matters related to civil
aviation and aviation in general, in terms of the Civil Aviation Authority Act No. 14 of 2010
The Port City Project is a collaborative venture between the GOSL/Ministry of Megapolis and the
Project Company and both parties would work together to ensure required social and
environmental obligations would be met. The latter is also important in considering that Port City
will be positioned as an eco‐friendly environment for living and recreation.

It is intended that the Project Company and the GOSL/Ministry of Megapolis & Western
Development/UDA will enter into an understanding on mitigation measures and resource
requirements for implementing such measures. This takes into account that certain commitments
for mitigation are the responsibility of the GOSL (such as the income support and benefits
program for the fishing community).

With regard to improvements in social infrastructure in the vicinity of the project, the Project
Company has already committed to this aspect by providing over 45 ha (around 1/6th of the total
reclaimed area) for parks and other recreational spaces within Port City for use by the general
public. The Project Company is committed to maintain the project site and undertake necessary
mitigation measures in keeping with the approved EIA, this SEIA and the Ministry of Megapolis
will adhere to and ensure the conditions in the development permit to be issued by the CCD to
the Ministry upon approval of this SEIA will be adhered by the Ministry/UDA/SLPA and the Project
Company.

Income Support & Benefits Programme for fishermen

This SEIA concludes that sand dredging is expected cause local and temporary impacts on the
biological environment due to the removal of benthic fauna and increasing turbidity as a result of
an increase in suspended particles in water columns. Hence it is proposed that the income
support and benefits programme will be worked out in detail by the relevant Ministries and
organizations / departments involved, with the inputs of community based organizations (CBOs)
such as the fishermen’s societies, churches, etc. As mentioned in this SEIA study, under the
Project Agreement entered into between the GOSL and the Project Company, formulation of such
a programme and the disbursement of funds is the responsibility of the GOSL and not the Project
Company.

Accordingly, it is proposed that a sum of Rs. 500 million be allocated to the Ministry of Fisheries
and Aquatic Resources Development via the Ministry of Megapolis and Western Development to
meet the requirements of the proposed fisher community income support and benefits program,
with supplementary funds allocated as needed, based on the evaluation of the effectiveness and
actual impact of dredging on fishery and aquaculture after a one year period. The Rs 500 million
will be deposited in a designated account in instalments for funds to be disbursed no less than on
a monthly basis. The Department of Fisheries and Aquatic Resources will finalize the overall
budgets and guidelines for the income support and community benefits program prior to
commencement of dredging and inform the fisher community and civic society at large.


The Ministry of Fisheries and Aquatic Resources Development together with the Department of

Fisheries and Aquatic Resources will accordingly be responsible for formulating and implementing
an acceptable community income support and benefits program for the affected fishermen. The
key objective of the income support and community benefits programme will be to uplift of the
social economic conditions of the fishing communities in areas such as:
(a) Community development programmes
(b) Research & development
(c) Projects to uplift the social standards of the relevant fishing communities
(d) Programs to enhance the marine ecology and fish breeding grounds and other related
programmes
(e) Income support to fishermen where direct impacts can be established
(f) Capacity development of Fisheries Inspectors to improve fisheries monitoring
(g) Establishment of a fisheries museum in Negombo
The impact of the dredging and the implementation of the benefits program should be effectively
and adequately monitored by the Ministry of Fisheries with continuous feedback provided to the
Project Proponent in order to fine‐tune the program.


CHAPTER 1
INTRODUCTION

1.1 Background of the Project
1.1.1 The Western Region Megapolis Regional Structure Plan of 2004
Expansion of the Colombo Central Business District (CBD) by reclaiming the sea was originally proposed
under the Western Region Megapolis Regional Structure Plan of July 2004, designated for
implementation by the Western Region Megapolis Task Force and the Board of Investment of Sri Lanka
(BOI). The Principal Technical Consultant to the Western Region Megapolis Master Planning Project was
CESMA International of Singapore, currently known as Surbana Jurong Pte Ltd (Surbana), appointed by
the Government of Sri Lanka in 2003. Surbana is a Singapore Government‐linked firm of urban planning
consultants established around 50 years ago for master planning the urban landscape of Singapore. To
date Surbana has completed urban planning studies in over 50 countries.
According to the Regional Structure Plan of 2004 (hereafter referred to as the CESMA Plan), the
expansion of the Colombo CBD had several components:
(a) To create new land banks for development and revitalization of the water‐edges to form the
water front city image
(b) To relocate existing Jaye Container Terminals (JCT) within the proposed Colombo South Harbour
and release land for waterfront real estate developments to reinforce the new CBD fabric.
(c) Figure 1.1: Proposed Port Expansion

Jaye Container Terminal North Port

Source: Regio nal Structure Plan of the Western Region Megapolis (2004) Volume 1, page 61
CECB ‐ SEIA Report – Proposed Colombo Port City Development Project‐ December 2015 Chapter 1 ‐ Page 1

(d) Subsequent to the construction of the ADB‐funded new Colombo South Harbour breakwater
(now completed), reclaim from the sea around 145 ha of land as an extension of the CBD by 2010.
This is the same location as the current Colombo Port City as shown in Figure 1.1
(e) Reclamation for the North Port by 2030 for port expansion and to provide lands for port related
facilities
Accordingly, the reclamation of land bordering the Colombo South Harbour breakwater was envisaged
11 years ago under the Western Region Megapolis Regional Structure Plan.
The implementation of the CESMA Plan was abandoned in 2005 primarily due to a change of
Government and the conflict situation that prevailed in the country. The Plan will however be reviewed
and updated in 2015‐16, again with technical assistance from Surbana, assisting the newly created
Ministry of Megapolis and Western Development.

1.1.2 The Colombo Port City Project: The Administrative Process
It is only with the advent of peace in Sri Lanka in 2009 and the commencement of construction of the
ADB funded Colombo South Port with its 5.4 km long breakwater that reclamation of land south of the
breakwater became technically and financially feasible.
The administrative process followed by the former Government in conceiving and developing what is
now known as Colombo Port City (CPC) is summarized below. (Section 1.1.4 summarizes the
environmental approval process)
(a) The CPC project was initially conceived as a public sector/Government funded project to be
undertaken by The Sri Lanka Port Authority (SLPA).
(b) Consequently, the SLPA commissioned at its own cost an “Initial Technical Feasibility Study” in
April 2010 for the reclamation of land South of the new breakwater retaining the services of
coastal engineers (local and foreign) and urban planners.
(c) Concurrently, around June 2010, an Environment Impact Assessment (EIA) study was
commissioned by SLPA at its own cost for a reclamation area of 200 ha. The University of
Moratuwa (UoM) was appointed as lead consultant and the Coast Conservation & Coastal
Resources Management Department (CCD) functioned as the Project Approving Agency (PAA)
(d) In October 2010, the UDA prepared a concept master plan for the area to be reclaimed and
submitted a Project Proposal to the SLPA for consideration.
(e) On 29th April 2011, China Communications & Construction Company (CCCC) submitted an initial
concept proposal for Colombo Port City to SLPA for an envisaged reclamation area of 200 ha, with
the entire financial investment for the project committed by CCCC as a Foreign Direct Investment
(FDI), without any Government guarantees on the investment.
(f) With the Government deciding to not to commit public funds to construct the Port City Project, a
Standing Cabinet Appointed Review Committee (SCARC) was appointed to review the above
concept proposal submitted by CCCC.
(g) In August 2011, SCARC, which comprised Secretaries of several Ministries, agreed to proceed with
the project as an unsolicited proposal and recommended that the Secretary, Ministry of Ports,
Highways & Shipping sign a non‐committal MOU between the SLPA and CCCC and to obtain a
detailed proposal from the investor. SCARC also recommended appointing a Technical Evaluation
Committee (TEC) comprising members from SLPA, CCD, Urban Development Authority (UDA),
Board of Investment (BOI), and Central Bank.
(h) Further to a recommendation by SCARC, the MoU between SLPA and CCCC was signed in
November 2011.

(i) In October 2012, CCCC submitted the detailed project proposal for a 233 ha reclamation and
preliminary designs to the SLPA. The Ministry of Ports forwarded this to SCARC for review and
negotiation by the TEC.
(j) The TEC then submitted “Technical Evaluation Report 1” and “Technical Evaluation Report 2” to
SCARC in March 2013 and July 2013 respectively. In August 2013, having reviewed the Technical
Evaluation reports, SCARC recommended that approval of the Cabinet of Ministers be obtained
for important commercial terms of the project.
(k) Following a Cabinet decision dated 13th January 2014, the Port City Project was identified as a
Strategic Development Project under the Strategic Development Projects Act no 14 of 2008.
(l) On 4th September 2014, the Cabinet of Ministers decided inter alia to implement the Colombo
Port City Project and, subject to approval by the Hon. Attorney General (AG), authorized the
Secretary to the Ministry of Highways, Ports and Shipping to enter into an Agreement on behalf of
the Government of Sri Lanka with CHEC Port City Colombo (Pvt) Ltd, the BOI approved company
set up to implement the project (the Project Company). It was further decided to authorize the
SLPA to carry out the required obligations under the agreement between GOSL and the Project
Company.
(m) On 16th September 2014 an Agreement was entered into between the Project Company and the
Secretary to the Ministry of Highways, Ports and Shipping (acting for and on behalf of the GOSL).
The Agreement was signed and the project’s construction works ceremonially inaugurated in the
presence of the President of the Peoples’ Republic of China and the President of the Democratic
Socialist Republic of Sri Lanka, during the Chinese President’s State visit to Sri Lanka.

1.1.3 Key Terms of the Agreement between GOSL/SLPA and Project Company
An Agreement was entered into between the Ministry of Ports and Shipping, acting on behalf of the
Government of Sri Lanka (GOSL), and CHEC Port City Colombo (Pvt) Ltd (the Project Company), signed
on 16th September 2014 and extended on 17th September 2015 (hereafter referred to as the “GOSL
Agreement”) and the Concession Agreement attached to the said GOSL Agreement as a binding
annexure (hereafter referred to as the “Project Agreement”). The key terms of the GOSL
Agreement/Project Agreement entered into between the GOSL and the Project Company, a fully
owned subsidiary of CCCC, can be summarized as follows:
(a) In terms of Clause 3 of the GOSL Agreement, all rights, obligations and liabilities of the SLPA are
deemed as rights, obligations and liabilities of the GOSL.
(b) The GOSL Agreement binds GOSL, thereby making the GOSL responsible, to obtain the applicable
permits for the reclamation works including environmental permits and consents. Accordingly,
article 12.1 of the Project Agreement specifically provides that the SLPA (GOSL) shall obtain inter
alia the following applicable permits and consents necessary for the design, construction and
completion of the reclamation works ensuring that there is no delay or disruption to the execution
of the reclamation works:
 The environmental clearances pursuant to an Environmental Impact Assessment (EIA);
 Sand Mining Licenses for sand borrow zone;
 Approval from the Department of Costal Conservation and Costal Resources Management
 Permits for quarry operations
 Approvals from the Department of Archaeology, Marine Environment Protection Authority
(MEPA) etc
Accordingly, under the Project Agreement signed on 16th September 2014 and later extended
via an Extension Agreement signed on 17th September 2014, the obligation to obtain the
necessary environmental approvals/permits is with the GOSL/SLPA


(c) The Colombo Port City will be developed in two distinct phases, with required environmental
approvals obtained via two EIA studies. Namely:
 Phase 1 EIA: For Reclamation of no less than 233 ha, sand extraction and construction of
coastal structures to protect the landfill for the proposed Port City
 Phase 2 EIA: Construction of the buildings and infrastructure of the Port City, including
traffic impact assessment
(d) The SLPA/GOSL would be responsible for the supply of utilities (water, power, sewerage) to the
Boundary of the reclamation site at a suitable connection point and with sufficient capacity
(e) The Project Agreement anticipated that the total area of marketable land (i.e. land to be sold or
leased to third party investors for development in keeping with prevailing laws of the country)
after allowing for public parks, roads and beaches shall be no less than 170 Hectares. Of this, the
Project Company shall be allocated no less than 108 Hectares of marketable land and the SLPA
allocated no less than 62 Hectares.
(f) The allocation of marketable lands (no less than 170 ha) between the Project Company and
Government will be carried out on an equitable basis where the Project Company will first select a
marketable land extent of less than 10 ha and then the Government will select a similar extent.
This process of alternative selections will be repeated until such time one of the Parties has
reached the maximum amount of marketable land to be allocated to that Party. Therefore, the
marketable lands allocated between the Government and Project Company will be in non‐
contiguous blocks.

1.1.4 The EIA Process for Reclamation
From the time the Colombo Port City project was to be implemented as a public investment in 2010 and
after the submission of the investment proposal by CCCC in April 2011, and in terms of the above‐
mentioned GOSL/Project Agreement, the responsibility for securing environmental and related permits
connected to the proposed project has been with the SLPA.
Accordingly, the SLPA at its own cost carried out environmental studies for reclamation (with CCD as the
PAA) and sand extraction (with the Central Environmental Authority as the PAA) in parallel. The Lead
Consultant for the environmental studies on the reclamation was the UoM. For sand extraction, the
National Aquatic & Research Agency (NARA) functioned as the Lead Consultant.
The process followed by the SLPA for the environmental studies connected to reclamation is outlined
below:
(a) The CCD as the PAA appointed a Scoping Committee comprising 16 Government agencies to
develop the Terms of Reference (ToR) for the EIA study in June 2010. They included the Colombo
Municipal Council (CMC), District Secretariat, Sri Lanka Navy, Divisional Secretariat, Ministry of
Defence, Ministry of Economic Development, Department of Fisheries, Urban Development
Authority (UDA), Sri Lanka Tourism Development Authority, CEA, Road Development Authority
(RDA), MEPA, Department of Archaeology, Geological Survey and Mines Bureau (GSMB) and Sri
Lanka Land Reclamation and Development Corporation (SLLRDC).
(b) In July 2010 the UoM commenced the EIA study and submitted the report, covering a reclamation
area of 200ha, to the SLPA in April 2011. This was forwarded by SLPA to the CCD.
(c) As required under Section 16 Sub section 2(b) of the Coast Conservation Act No 57 of 1981, the
EIA report was made available to the Public. The CCD placed advertisements in major newspapers
on 21st June 2011 in all three languages to inform the public of the availability of the report for
review at 11 locations including the CEA, UDA, CMC, GSMB and Ministry of Fisheries.

(d) On 20th Sept 2011, the CCD wrote to SLPA forwarding the comments received from the public for
clarification. Acting on behalf of the SLPA, the UoM clarified in writing the relevant public
inquiries, which were forwarded to the CCD by SLPA
(e) By way of letter dated 7th December 2011, the CCD wrote to the SLPA stating that the TEC had
granted preliminary approval to the EIA.
(f) In view of the investment proposal submitted by CCCC in 2012 (after completion of the EIA for
200 ha) was for a reclamation area of 233 ha, an Addendum report to the EIA was prepared by
UoM and submitted via the SLPA to the CCD in September 2013. The main objective of the
Addendum to the EIA was to inform the PAA of a “deviation which has taken place to expand the
project (from 200 ha to 233 ha), primarily to accommodate the land component to be given to
the Government, an internal canal system and to enhance relevant facilities and services and
improve integration with the South Port and City of Colombo”
(g) The SLPA sought approval of the CCD to the Addendum to the EIA and, by way of letter dated 27th
November 2013, the CCD wrote to the SLPA communicating no objection to the modifications
proposed to the EIA by the said Addendum. A key condition imposed in this letter was that an
Environmental Management Plan (EMP) is submitted for approval by the CCD.
(h) On 23rd October 2014, the CCD issued a “Permit for a Development Activity under Part III –
Section 14 of the Coast Conservation & Coastal Resource Management Act No 57 of 1981, for
reclamation, dredging and construction of breakwaters, revetments”. This permit contained 42
conditions of which condition No 40 states ”A Separate approval should be obtained from the
CEA for extracting sand from the offshore to be reclaimed the proposed near shore area and
submitted to this department prior to the commencement of the construction.”
(i) The Environment Management Plan (EMP) was submitted by the SLPA to the CCD and on 2nd
December 2014, the CCD wrote to the SLPA stating that the EMP is approved. SLPA the wrote to
the Project Company regarding the approval for the EMP.

1.1.5 Sand Extraction & Basis for Commencement of Reclamation Works
As stated above the SLPA obtained required approvals for the EIA study for reclamation of 200 ha and
the subsequent Addendum thereto. This section examines the adequacy of consents obtained by the
SLPA for commencement of sand extraction by the Project Company, particularly with regard to
obtaining required approvals from the CEA in keeping with Clause 40 of the Development Permit issued
by the CCD.
Sand extraction in open sea beyond the 2km coastal zone requires environmental clearances from the
CEA as PAA, unless the CEA delegates such authority to another Government body in keeping with the
provisions of the National Environmental Act. The process followed during the 2011‐2014 period in
connection with environmental approvals for sand extraction is summarized below:
(a) In June 2011 the Director General of GSMB, under provisions of the Mines & Minerals Act No 33
of 1992, issued to the SLPA an Exploration License No EL/177 for a sand borrow area of 46 sq. km
(b) The CEA informed the SLPA in writing that an Initial Environmental Examination (IEE) should be
carried out for sand extraction for the above borrow area. Thereafter, the CEA issued the ToR for
the IEE to SLPA on 9th September 2011
(c) The SLPA then commissioned NARA as the lead consultant to prepare the IEE report
(d) In September 2012 NARA submitted the draft IEE report to the SLPA stating that the identified
area of 46 sq km contains a dredge‐able sand quantity of 44 million cu. m.
(e) However, this quantum of sand was deemed insufficient to meet an estimated requirement of 65
‐75 million cu. m. of sand to complete reclamation. Furthermore it was suggested that identifying
additional borrow areas would mitigate the impact on fishing.

(f) The SLPA therefore obtained another exploration license No: EL/281 dated 8th November 2013
from the GSMB, covering an area of 54 sq. km.
(g) The SLPA then commissioned NARA to carry out a second IEE study for the second borrow site and
completed the draft IEE report in December 2014. Geophysical investigations carried out for the
second IEE study established that a total sand deposit of 68.3 mn cu. m. was available for
dredging. Accordingly, in studies covering both borrow areas, a dredge‐able sand quantum of 112
mn cu.m, or around double the quantity of sand required by Port City for reclamation works, was
identified.

Obtaining the required consents for the fishermen’s compensation program was a pre‐requisite for
the CEA to grant the necessary permits to dredge sand. Despite almost a year of attempting to obtain
the required consents, the SLPA encountered several roadblocks in fulfilling this task. In the
circumstances, the SLPA could not obtain the required sand extraction permits from the CEA for the
identified borrow areas as stipulated in the development permit of the CCD and in terms of the
Project Agreement, which assigned this responsibility to the GOSL/SLPA.
On the basis of the above, the SLPA did not have the required sand extraction permits from the CEA for
the identified borrow areas.
The Project Company commenced sand extraction and reclamation works on 16th September 2014 on
the basis of the following:
 Consequent to the GOSL’s wish to inaugurate the project at the time of the State visit by the
President of China, the reclamation works commenced from the date of the said GOSL/Project
Agreement, where and in terms of Clause 4.1 of the Project Agreement, it is stated that “on and
from the date of this Agreement, the Project Company shall design and carry out the
reclamation works in accordance with the Concession Agreement”.
 In addition, the Project Company was granted written permission by the SLPA to dredge the
Colombo Harbour navigation channel, pending (as understood by the Project Company) the
finalization of the two IEE studies by NARA for sand borrow areas.
Under the above circumstances, where in terms of Article 12.1 of the Project Agreement the
obligation to obtain the necessary/applicable licenses and permits is a responsibility of the
SLPA/GOSL, the Project Company has taken the position that sand extraction and reclamation works
commenced on 16th September 2014 on the basis of provisions contained in the Agreement itself and
on the basis of written clearances provided by the SLPA.

1.1.6 Other Permits secured
Leading up to the commencement of construction and soon thereafter, in keeping with the provisions
of the Project Agreement, the SLPA obtained permits mentioned below and informed the Project
Company in writing:
(a) Letter of Approval from the Department of Archaeology dated 18th July 2012 following the
Archaeological Impact Assessment of the Colombo Port City Project done by the Underwater
Archaeology Unit of the Department of Archaeology from November 2011 to February 2012
pursuant to a request made by the SLPA by letter dated 22nd June 2010.
(b) Industrial Mining License for Sea Sand No. IML/A/HO/8328 dated 16th September 2014 issued by
the GSMB
(c) Security Clearance and approval for commencement of the Colombo Port City Project dated 25th
September 2014, granted by the Ministry of Defence & Urban Development.
(d) Approval for the Oil Spill Contingency Plan submitted by the Project Company by the Marine
Environmental Protection Authority dated 18th December 2014, issued under the Marine Pollution
Prevention Act No. 35 of 2008

(e) Approval dated 2nd December 2014 granted by the CCD for the Environmental Management Plan
(EMP) submitted by the Project Company via the SLPA

1.1.7 The Suspension of Construction and Way Forward
Subsequently, the new Government elected on 8th January 2015 appointed an Evaluation Committee
to review the Port City project on 30th January 2015. On the basis of certain conclusions reached by this
Committee (without any consultation with the Project Company), on 4th March 2015, the Cabinet of
Ministers made a decision to suspend the construction works of the Port City Project. This decision was
communicated to the Project Company by the Secretary Ministry of Ports, Shipping & Aviation on 6th
March 2015. During the period of suspension, the Government has made the following decisions, in
consultation with the Project Company where necessary:
(a) The GOSL Agreement of 16th September 2014 would be amended to inter alia permit the UDA
to step into the role of the SLPA and the end date of the said GOSL Agreement would be
extended by 6 months to inter alia facilitate the said transition
(b) The necessary amendments to the Project Agreement shall be effected via a tri‐partite
agreement between the GOSL represented by the Ministry in charge of the UDA (the Ministry of
Megapolis and Western Development), the UDA and the Project Company.
(c) A Supplementary Environmental Impact Assessment (SEIA) shall be carried out for expansion of
the reclamation area from 200 ha to an altered design of 269 ha together with the impacts of
extraction of sand from the identified borrow areas and quarry material required for the altered
design.

This SEIA is a consequence of the aforesaid decisions taken by the Government

The evolution of the Project Area from the time of the original EIA to the current SEIA is summarized in
Table 1.1 below
Table 1.1 Project Area & Reclaimed Area Evolution
EIA* Addendum** SEIA**
Major Elements of Project (in Hectares) 2011 2013 2015
Reclaimed land area 200 233.5 269
Beach area Not specified Not specified 19.79
Canal area None 23.7 15.24
Water area between landfill & breakwater 161.8 113
Seabed area occupied by protective structures 67.3 29.58
Total Project Area 351.0 486.3 446.61
Note: * Based on designs commissioned by SLPA
** Based on designs of the investor, CCCC

1.2 Objective and Justification of the Project
1.2.1 Objectives in Relation to Western Region Megapolis Structure Plan (CESMA Plan)

The CESMA Plan of 2004 identifies a “Colombo Core Area Plan”, which has the following development
objectives:
(a) Colombo to be the economic engine of the country and contribute to improving Sri Lanka’s
international competitiveness to realize its projected economic growth rate of 10%

(b) To develop and revitalize the city of Colombo as the financial and business hub of the South Asian
region
(c) To attract foreign and local investors to share the responsibilities for accelerating growth and
provide the resources needed to regain lost economic initiative
(d) To attract tourists by making Sri Lanka their preferred destination
(e) To increase infrastructure capacities while conserving the fragile environment
(f) To make prime lands available for development

It is noted that over 70% of lands identified for development within the Colombo Central Business
District under the CESMA Plan of 2004 were water‐front properties, which in capital cities typically
command a premium and considered more desirable to live and work.

1.2.2 The Strategic Objectives of Colombo Port City

The objectives of the Colombo Port City are broadly in harmony with the policy objectives enunciated
in the CESMA Plan. The Port City project would reclaim 269 ha of waterfront land that will comprise
around 173 ha of land that will be marketed to local and international developers to undertake
developments according to a phased master plan. The objectives of Colombo Port City as formulated
by the Project Company are as follows:
 Taking advantage of the natural accumulation of sand caused by the protection afforded by the
South Harbour breakwater, to significantly expand the Colombo CBD to meet the demand for
such land over a 20‐25 year period
 To foster integrated oceanfront living within the CBD to provide high quality of life through world‐
class office, residential and recreational spaces that will attract tourists, professionals,
entrepreneurs, managers and retirees.
 Position Colombo as the most liveable city in South Asia
 To create a regional business hub, a city with a distinct brand with high quality public spaces and
infrastructure facilities, attractive to local and international developers and investors
 To create a tourism hub with a unique character that reflects the distinctive local culture and the
existing urban fabric
 To design and build a sustainable urban city space that adapts to local climate, creates a
comfortable micro‐climate and make efficient use of energy resources

Therefore, the location of Port City takes advantage of twin attractions of proximity to the Colombo
CBD and oceanfront living. This is a tried and tested formula by city centres that aspire to position
themselves as destinations for tourism, living, working, shopping and entertainment.
Also, the Colombo CBD has limited oceanfront lands available for development, especially in view of
the land area facing Galle Face, formerly occupied by the Defence forces, now being allocated to
Shangri‐La and ITC Hotels.
Presently, Colombo is not a “Destination”, but primarily a transit point for tourists. The average stay by
tourists is roughly 1.6 nights for Colombo, which is too low by international norms. (In comparison,
average stay at a beach location of a typical tourist to Sri Lanka is 5.5 nights). The lack of vibrancy of
Colombo in terms of multiple shopping and entertainment choices is a significant deterrent to
attracting South and East Asian tourists to Sri Lanka. Sri Lanka’s tourist arrivals being impacted by
cyclicality (with higher arrivals being recorded during the traditional winter season) can be primarily
attributed to Colombo not being a sought after tourist destination.
Colombo cannot become a destination that appeals to the international business travellers or tourists
with ad‐hoc developments and without distinct positioning. Therefore, Colombo Port City provides an

opportunity for the old and historic part of Colombo’s central business district to interface with a
modern planned metropolis like no other in developing Southeast Asia.

1.2.3 Permissible Developments within Colombo Port City

Permissible Developments within the 269 reclaimed land area will be In keeping with Sri Lanka’s
planning and building regulations and on the basis of the reclaimed land being gazetted under the Sri
Lanka Lands Ordinance and subsequently as an Area of Authority under the UDA Act. Samples of
permissible developments under the master plan for Port City already submitted to the UDA for
preliminary planning clearance are given below. These are subject to the country’s investment laws and
any other applicable statutes:
 Commercial: Banks, offices and retail, hotels and restaurants, diplomatic embassies
 Residential: Dwelling houses/units, apartment buildings, serviced apartments
 Institutions: Healthcare, educational and R& D institutions
 Small businesses and services and allied activities: Open air trading areas, beauty salons,
bakeries, laundries, printing, computer repair, small scale art and handcraft workshops, car and
bicycle repair and service, plumbing and carpentry workshops and other local small scale
businesses and services such as cafes, kiosks, pavilions, newspaper stands, food trucks and book
shops
 Entertainment: Indoor amusement and entertainment establishments, outdoor recreational
spaces
 Community: Art galleries, socio‐cultural establishments/community centres
 Other: Marina and related facilities, tourism business, convention and event facilities, cultural
events and festivals

No Industrial activities will be allowed within Port City.
The Project Company has also hired world‐renowned international consultants working together with
local specialists to advise on various aspects connected to the development: For e.g: Atkins of UK:
Master plan review; Aecom of USA: Utility design, road design and landscaping; Sweco of Sweden:
Overall master planning; Jones Land LaSalle (JLL) and CB Richard Ellis (CBRE) of UK: financial and
marketing pre‐feasibility and CDR of Holland for technical review of designs by the EPC contractor.

1.2.4 Forces that Produce Financial Centres: Some Theory

A key objective of the CESMA Plan and the Colombo Port City project is to position Colombo as a
regional financial centre. There is sufficient empirical evidence, when examining the evolution of
Central Business Districts of regional financial centres such as Hong Kong, Shanghai, Singapore and
Dubai and even New York and Frankfurt that finance has become more concentrated in designated
areas of the CBDs than any other area of commerce. (Example: Wall Street in New York, Dubai
International Financial Centre).
Significant savings and synergies are possible when financial centres evolve within centralized areas.
Historically, such centres attracted regional headquarters of banks and with them, other financial
institutions, financial intermediaries and corporate headquarters. Being adjacent to a regional hub
port, as is the case in Colombo, becomes an added advantage in attracting finance and commerce to a
CBD.
This provides a clue as to why financial centres evolved within CBDs of cities: economies of scale.
Centralization of financial services is typically a result of several needs:

 The need to facilitate the process of information gathering: Finance depends on obtaining
timely and accurate information and the process of information‐gathering increases the pressure
for clustering. Therefore, market participants tend to gather close to one another and to their
principal sources of information: e.g. corporate headquarters, financial regulators, government
etc.
 The need to centralize participants engaged in complex financial transactions: Finance exists to
serve the needs of industry and services. Corporate headquarters are usually located in and
around financial centres, even though production facilities would be located elsewhere. Also,
when complex corporate finance deals such as mergers and acquisitions need to be structured,
participants to the deal including corporate executives, institutional investors, accountants,
lawyers and regulators should ideally be available in one location. For example, the Central area
of Hong Kong the saying goes is a place where a financier can walk several blocks and raise $ 10
billion.
 The need to minimize costs in searching for counterparties with whom to trade: For investors
and issuers alike, the crucial function of a financial market is price discovery (the process that
finds the right price to optimize supply and demand). These functions work best when many
buyers and sellers are congregated in a financial centre. Therefore, financial market
intermediaries and participants such as banks, stock brokers, fund managers and insurers have a
strong incentive to cluster in financial centres.
 The need to recruit and train highly skilled financial professionals: Like most service industries,
finance is a people‐oriented business. However, specialist skills required in financial services tend
to concentrate in a central financial district of the CBD and hence the industry tends to expand
around it.

It can be argued that the advent of the Internet and connectivity has reduced the propensity for
financial centres to cluster around a central business district. However, the above forces taken together
with a congenial living environment (such as an oceanfront area with parks and cultural activities) and
the availability of good regulations, connectivity, infrastructure and strategic proximity to a large
economy such as India would contribute towards financial and related services being concentrated
around a CBD.
It is precisely this environment required to establish Colombo as a regional financial centre that
Colombo Port City is attempting to create.

1.3 Objective of the SEIA Report
1.3.1 The 2‐Stage EIA Process

Several important issues were raised in the Initial Technical Feasibility Study of 2010 and the EIA study of
2011 for the 200 ha reclamation. They were:
(a) The proposed Port City has to be developed in 2 stages. The first stage will be the landfill, the
offshore breakwater and the coast protection for the protection of the landfill. The Second Stage
will be the planned development of Port City with all infrastructure and support services
(b) If the Project Company developing Port City development modifies the overall design, then
environmental consultants would be commissioned to present an addendum to the EIA to confirm
that the changes and resultant environmental impacts will not make a significant change to the
findings of the initial EIA completed for 200ha. If changes to the design are significant then a fresh
EIA will be carried out.
(c) A detailed EIA will have to be carried out for the infrastructure development plan of the Port City
and the proposed developments on the reclaimed land.


The objective of this Supplementary EIA is a consequence of (b) above: that is, to capture the design
changes since the completion of the EIA of 2011 and to subject to public scrutiny the aspects covered in
the Addendum to the EIA of 2013 and subsequent changes. It is noted that the Addendum to the EIA of
2011 was not open to public comments.
Varying approaches can be undertakes for environmental studies. It is the prerogative of the Government
policy makers led by the Project Approving Agency (PAA) to decide on the scope of the environmental
studies. Accordingly, the respective Government appointed review committees evaluating the Port City
project recommended to the Cabinet of Ministers to adhere to a 2 stage EIA process for Port City, and
accordingly provision was made for such a course of action in the Project Agreement signed between the
GOSL and the Project Company. Therefore, as mentioned earlier in this SEIA report, Colombo Port City
will be developed in two distinct phases, with required environmental approvals obtained via two related
EIA studies.
This SEIA is therefore to be read as a Supplementary to the approved EIA of 2011. Notwithstanding, this
SEIA study covers the entire reclamation footprint and the extraction of quarry material and sand
required to complete the entire project. The Phase 2 EIA for the construction of the buildings and
infrastructure of the Port City, including traffic impact assessment will commence in parallel or
immediately after completing this SEIA study.

1.3.2 Precedence of 2‐stage EIA Process

Project Approving Agencies in the past have carried out 2‐stage EIA processes. In the case of the
Muthurajawela landfill that commenced around 1994, a total of 162 ha of near‐shore lands were
reclaimed from a very sensitive marsh area by dredging for sand from the sea. (The filled area is roughly
70% of the size of Port City).
The EIA carried out for the Muthurajawela project was only for the hydraulic landfill and did not cover
infrastructure aspects and the constructions on the filled land. However, the study covered the
environmental impacts of the sand borrow area. The industries/buildings that were built on the landfill
carried out separate environmental studies prior to construction (e.g. Shell Terminal) and the land was
marketed at commercial rates by SLLR&DC.
Also internationally, a 2‐stage EIA is a recognised approach. In the Netherlands, where EIA processes are
very strictly followed, a 2‐stage approach was followed for the recent expansion of the Port of Rotterdam
by 2000 hectares (the so‐called “Maasvlakte II” project). The first EIA was for the “realisation phase” of
the land reclamation, covering coastal impact, dredging practices, etc. The second EIA was for the
“development phase” analysing the impact of the new activities within the port for the environment and
surrounding areas.

1.4 Extent and scope of the study
The ToR issued by the Department of Coast Conservation and Coastal Resources Management (CCD),
the Project Approving Agency (PAA), defines the scope of this SEIA study. The ToR is given in Annex I.
The study area for the assessment is defined in the ToR as follows:
(a) Project site/s: Reclamation Area and Borrow Sites
(b) For coastal erosion aspects: Reclamation area and 10 km on either side (Northern area and
Southern Area) of the coastal belt.
(c) For all other studies: 1km from the project sites (reclamation area and borrow sites).
(d) Any area beyond the project site/sites, where there is potential for environmental impacts: The
SEIA study team shall determine the limits of the influenced area.

The ToR outlines the report structure and the issues to be addressed during the study. The study covers
the existing environmental parameters of the Project area (present situation) and impacts, both short‐
term and long‐term in nature. The analysis proposes effective mitigation measures and monitoring
programmes.

1.5 Methodologies and technologies adopted in SEIA report preparation
A number of methods have been adopted to assess the environmental impacts of the Colombo Port City
Project. These methods supplement the studies carried out for the Project Feasibility Studies, the EIA for
200 ha and this SEIA study. The assessment methodologies have been used to evaluate impacts arising
from the development at the study area, the surrounding areas and the sand borrow areas. These
methodologies are described in the paragraphs below.
1.5.1 Desk Studies
The approach in the preparation of this SEIA report was to draw on and build upon the Project
Feasibility Studies, specific technical studies carried out for the Port City Project, and information
available from the EIAs and EMPs of Colombo South Port. Relevant documents have been reviewed and
additional studies carried out to validate and where necessary, supplement the existing information to
take into account the development of the design under this SEIA study. In addition, previous study
reports have been used extensively to confirm the baseline situation and guide the SEIA process.
1.5.2 Feasibility Design Investigations and their relevance to the EIA Process
To the maximum possible extent, environmental considerations have governed the planning and layout
of Port City and incorporated into the design process from its inception. This has allowed the early
identification of any environmental issues, which may impose constrains on the design. This approach of
“Mitigation by Design” has reduced the need for a range of specific mitigation measures.
Numerical modelling studies and physical model test studies have led to the development of a
hydraulically efficient layout with respect to overall impacts on the coastal regime. Hydrodynamic and
wave disturbance modelling studies have been carried out to investigate the impact of the overall layout
on the coastal regime and to ensure satisfactory levels of wave disturbance are maintained at the water
area within Port City.
1.5.3 Wave and Hydrodynamics
A comprehensive review of the modelling work carried out during Port City’s feasibility study stage, and
preliminary design stage were undertaken for this SEIA. In addition, separate studies have also been
carried out and relevant reports prepared for this SEIA. These reports include:
(a) Final report on Hydrographical Survey
(b) 2‐D Stability Physical Model Test on the offshore breakwater and revetment for marina
(c) 3‐D Physical model test south part and 3‐D physical model test North part
(d) Analysis (numerical modelling) of coastal evolution and siltation
(e) Analysis (numerical modelling) of water exchange
(f) Wave physical Model Test of the Stability of Beach Profile
(g) Analysis (numerical modelling) of Water Exchange Supplementary Report for the effect of Port
City on Beira Lake outfall
(h) Ground investigation preliminary report
(i) 3‐D Physical model test on the Southern Part of Colombo Port City project


1.5.4 Geophysical Investigation
The geophysical survey was carried out to investigate the potential extractable sand volume and
sedimentological status. Sub‐bottom profiling was conducted to estimate the sediment thickness of
the area which leading to study sediment distribution. Sub‐bottom profiler was used to investigate
subsurface geological structures such as stratification (thickness of subsurface strata and extension)
of the area. Innormar “SES‐2000” Sediment parametric echo sounder was used to differentiate
strata and data were used to measure the layer thickness of the sediment deposits in the proposed
site. SESWIN and ISE 1.2 software were applied for data acquisition, processing and thickness
estimation respectively. The sub‐bottom profiler was consists of dual frequency sonar head with
50m penetration depth, However, depth of penetration is limited by the conditions of the sediments
and the environmental condition of the survey area. The survey was designed as systematic
sampling method and sub‐bottom profiling survey was done along the pre designed lines in the area.
Each sample was collected within 2 km grid and sub‐bottom profiling was conducted with 1 km line
spacing. During the analysis isopach map, sediment distribution map and bathymetric map of the
area were generated using Surfer and ArcGIS software.
Frequency of the data acquisition for the investigation was about 8 kHz, while pulse repetition rate
was 4. Differential Global Positioning System (GDPS) with accuracy +/‐ 20cm is integrated to the
instrument during data acquisition. The hypack navigation system is used to guide the vessel along
predetermined survey lines. The average sand layer thickness was used to estimate the sand
volume.
Sediment Sampling
Sediment sampling procedure was designed as systematic manner. Bottom sediment samples were
collected by manually to identify sand characteristics.
Sieve analysis
Grain size differentiation of the sediments was done by sieve analysis. Sediment samples were
washed and dried for dis‐aggregation. Larger shells and organic materials were manually removed.
Percentage ratio of sediment fractions is used for classification of sediments.
1.5.5 Bathymetric Survey
Bathymetric survey lines were designed with 300m (line spacing) interval using Hypack Max
software. Integrated echo Sounder and positioning system (DGPS) were used for data acquisition.
Transducer of the echo‐sounder was fixed on a lower draft of small boat. The data acquisition
system comprised a computer with Hypack Max software and a display unit. The display navigates
the boat along the pre‐set survey line with the help of left right indicator. Positioning (Easting X,
Northing Y) and depth data from GPS and echo‐sounder (Z) were recorded in a data log file for each
survey line. Sound velocity was measured using Sound Velocity Probe (SVP) twice a day during the
survey, at the beginning and the end of each survey. Echo‐sounder calibration was done by “Bar
check” method. Water level measurements during the survey was taken and recorded in every 15
minutes by Tide Pole. All (X, Y) coordinates were connected to national grid of Sri Lanka and depth
was referenced to MSL.
1.5.6 Ecological Studies:
The nekton in the marine environment of the reclamation area was observed by visual observations
carried out during underwater surveys while plankton were collected using a 50 μ plankton net
drawn through the water. Benthos including reef organisms, other macro‐fauna on the sea bottom
and sea grass beds were examined during underwater surveys carried along a 1 km long transect
which was located in front of Galle Face Green extending over the Palagala reef. (Coordinates of the
transect are E 79o49’12’’ – E 79o50’24’’ and N 6o55’18’’ – 6o55’20’’)

The transect was at a depth ranging from 8 m to 18 m. The entire transect was on soft bottom except a
mid‐region where it crossed the Palagala reef. During underwater surveys, a 1 m x 1 m quadrate was
used at each sampling site to estimate the cover of benthic organisms.
The percentages of animals and plants were estimated using the visual estimation technique. The
organisms were identified to the lowest taxonomic group possible. During the period of the underwater
surveys, due to high turbidity, the visibility was very low being less than 1.0 m. Therefore, the
abundance of fish in this area could not be estimated. The mollusk shells that were washed onto the
shore were collected and identified using Kirthisinghe (1978).
In order to recognize the existing biological environment in the proposed sand extraction area, data
and information were gathered from both primary and secondary sources. Existing literature on
describing habitats, resources, environmental conditions was analyzed to ascertain ecological
importance and assess the potential consequences of sand dragging activities.
Present distribution, biodiversity and health of coral reefs/ sea grass beds
Information on coral and sea‐grass distribution was initially gathered by topography map and
exploiting traditional knowledge of fishermen. Afterwards underwater manta tow survey was
conducted to ensure the selected sites are in a comparable habitat. Visual surveys using Underwater
Visual Census (UVC) were conducted during daylight hours between 7:00 and 16:00, on the days
where the visibility was relatively fair. Ten dive sites in each representative habitats; reef and
sand/mud were surveyed from 15th September to 10th October 2015. Moreover data gathered
from same techniques for the coral reef survey for Onagala and associated environment in
November 2012 and March 2014 were also used.
Belt transect laid at each dive sites was surveyed by concurrently employing two experienced SCUBA
divers. They were instructed to swim along at a steady pace without stopping, so they generally did
not deviate from the belt‐transect to inspect crevices. The fish observer followed the belt transect of
50 x 4 m by swimming along the center‐line of the belt transect with a PVC rod as guide. The

observer count, recorded the species diversity and the second diver videoed all fish within the area 4
m to either side of the center line and also 2 m upwards of the eye level.
At each transect mobile and the sessile fauna and the substrate was recorded in terms of the
percentage cover of sand, rubble, limestone platform, coral or terrestrial rock and mud. Other
benthic taxa such as black coral and whip coral and the percentage cover of other conspicuous biota
such as sea‐grass and algae were also recorded. Transects were laid systematically and objectively to
clearly visualize the local habitat features. All survey points were marked using GPS.
Present distribution, species composition and richness of sea bottom macro zoo benthos
More than twenty five fish in mono‐specific groups were observed to estimate the total population.
For schools of mixed species the number was estimated for the entire school by making
approximation of the proportion of each species comprising the school. Photographs and videos
were also used for estimation, validation and species identification. Benthic samples were randomly
collected using an Ekman Bottom Grab Sampler from the two sand borrow sites so that
representing both muddy and sandy substrates. Samples were
stored in 10% formalin and rose Bengal solution and sieved for the
identification and enumeration of sediment ‐ dwelling macro
organisms by different size categories residing in the sediment.
Under water photographs (photo quadrat) and video of the
substrate along the distance of 50 m transect were also made to
validate the point intercept method facilitate species identification.
Photographs were made using a 10 mega pixel Canon IXUS digital
camera. The photos were geo‐referenced through post processing
of the track recorded by a GPS, being towed by the same diver
taking the photos. The organism lying beneath each point was
identified to the most detailed taxonomic or most precise
taxonomic level possible, depending on the resolution of the video images and photographs and also
the skill of the observer. Quantitative analyses were performed based on the following eight major
benthic categories: abiotic (subdivided into bare rock, rubble, dead coral, mud, sand & silt), biotic:
(soft coral, gorgonian, hard coral, molluscs, sea‐grass, sea weeds).
Present occurrence of endangered species or extra ordinary natural resources
The relevant information on endangered species was obtained from available literature, personal
communications with the coastal communities and independent recording of their sightings through
employing onboard observers at limited occasions. The research platform was an 18 foot OBM
fishing boat. The boat generally ran 4‐6 hour trips between 06:00 hrs to 18:00 hrs. Two trained
observers recorded sightings from amidships to the bow, one looking to port and the other to
starboard. They searched for cetaceans, sea turtles by eye and using binoculars. It should be noted
that search efforts ceased during bad weather namely, rain, strong winds, and rough seas. Ten visits
were made during the study period and in each visit, the entire beach stretch was surveyed two
times; early morning and night. Further, information also gathered through interactions with locals,
especially fishermen. Questions were asked on the sightings, presence of turtles close or far from
the shore, number of turtles incidentally captured and species. Afterwards beach surveys conducted
to determine the turtle nesting in the west coast.
Present conditions concerning nutrient dynamic, algae blooms and water turbidity
Totally 22 sampling positions were selected from sand extraction area to study the nutrient
dynamics and phytoplankton assemblage. Water samples were collected at the depth of 0.5 m from
the surface to study the nutrient levels and preserved at ‐20o C. Phytoplankton samples were
obtained using a net with a mesh size of 10 µm and immediately preserved with Lugol’s iodine

solution. Turbidity was measured by a turbidity meter. In addition to turbidity, total suspended solid
level (TSS) was measured.
Phytoplankton: Supernatant of the preserved phytoplankton sample was decanted without
disturbing the settled cells so that the sample is concentrated to a known volume. One ml of this
concentrated sample was placed in the Sedgwick rafter cell and observed and the number of
phytoplankton was counted under the light microscope at a magnification of 10x10. Samples were
analyzed for determination of phytoplankton abundance, composition and diversity (Newell and
Newell 1963; Robert Perry 2003; Verlencar, X.N. &Somshekar Desai, 2004, Jayasiri,2009).
Determination of Chlorophyll content in waters: Chlorophyll was determined by filtering 1 litre of
the water samples using GF/C filters (nominal pore size 0.7 μm) under low vacuum. The pigment
extraction was done with 10 ml of 90% acetone. The optical density (absorbance) of the extract was
determined using a UV Visible spectrophotometer (Parsons and Strickland 1963; Richards and
Thompson 1952). Chlorophyll a concentrations was calculated using the equations of Parsons et al.
(1984).
Nutrients analysis: Nutrients (Nitrite‐N, Nitrate‐N, Phosphate‐P and Silicate‐Si) were analyzed
according to the standards procedure of Parsons et al., (1984) using spectrophotometer (OPTIZEN
3220UV). Sample preparation for nitrite and nitrate was done according to the Cadmium reduction
method and absorbance was measured at 543 nm wavelength. Phosphate was analyzed according to
the ascorbic method and absorbance was measured at 885 nm wavelength. For the analysis of
silicate, molibdate method was used and absorbance was measured at 810 nm wavelength.
Total suspended solids (TSS): Filter papers (GF/C [0.7 micro pore size of 47 mm diameter]) were
dried in an oven at 105 °C for 1 hour period. Then the initial weights of filter papers (W1) were
measured using analytical balance (Precisa XB 120A). Each 1 litre of samples was filtered using a
filter unit and filter papers were dried in an oven at 105 °C for 1 hour until get a constant weight
(W2). Then the final weights are recorded. Following equation was used for the calculation of TSS in
mgL‐1.
W2– W1
TSS 1000
Volume

Breeding grounds / spawning grounds, nursery grounds and migratory routs for commercial and
ecologically important marine organisms:
Spawning ground is a place where fish leave their eggs for fertilization. Many fish species aggregate
to spawn. Whereas some species may aggregate behaviourally and so may have extensive spawning
grounds that may change location slightly from year to year, other species may aggregate over a
more restricted spatial extent. The grounds where juveniles are found at higher densities are termed
nursery grounds. They have reduced rates of predation and have faster growth rates than in other
habitats, which should result in nursery grounds providing a greater relative contribution to adult
recruitment in comparison to non‐nursery ground habitats. Migration of fish is defined as an active
main movement from one habitat to another (Nikolsky, 1963). There are three main movements in
the migratory cycle of fishes; spawning migration, feeding migration and winter migration.
The most effective methodology to adopt to identify the spawning grounds is to collect data on the
distribution of the planktonic stages of fish eggs and larvae (ichthyoplankton). In a multispecies
situation spawning strategies are varied and as such fish egg and fish larvae data have to be
collected with different target species and spatial and temporal coverage to infer species specific
spawning areas. Since lack of time series data on ichthyoplankton, the present study adopted a
robust and indirect method to delineate spawning grounds and season of selected species exploiting
research experience and the traditional knowledge of fishermen.

Small pelagic resources are the main fisheries in the study area. The species composition of the catch
dominates by Amblygstersirm (hurulla), and Sardinellalongiceps (salaya). Bottom trawling for
shrimps is the second most important fishery and the shrimp catch consisting mainly Penaeus indicus
and Metapenaeus dobsoni. Information on spawning grounds and seasons of dominate species were
obtained from literatures.
There are numerous methods for tracing the migrations of fishes. Most commonly applied methods
are; marking, tagging, parasite studies, length frequency and catch rates analysis. However, these
methods are more precise where large scale migration occurs in more extended area and also it is
hard to fit successfully tags to all fish species especially for small fish to fishery and all size groups of
fish. Therefore migration of fish and shrimps and retirement were made through length frequency
analysis.
Identification and mapping of fishing grounds
Use of study area as a fishing ground was physically inspected at sea. Two to three observers (NARA
scientists) were onboard at the sea to record the information such as type of the boat, fishing gear
used, fishing time and target fishery etc. The fishing roots or navigational roots of the boats were
tracked to collect information on the spatial extent of fishing activities in the study area using a GPS.
The fishing grounds were then mapped using Geographic Information system (GIS). Attribute maps
were also generated based on the required visual representation.
Biodiversity profile within the sand borrow sites
The information/ observations/evidences gathered in the above mentioned surveys were utilized to
describe the bio diversity profile within the sand borrow sites.
1.5.7 Assessment of the socio‐economic environment
The socio‐economic assessment of the CPCD area was carried out using both published and
unpublished data. First, a thorough study of socio‐economic conditions of the entire project area
was carried out (including GN divisions of the project area, and Colombo Metropolitan Area) using
both published and unpublished secondary data by the Department of Census and Statistics on
labour force , business activities , housing conditions , poverty, income and expenditure patterns
and Construction Industry. In addition, unpublished data were also collected form the Ministry of
Fisheries and District Fisheries Officials on fish production, stock of fishing vessels, and living status
of fishing communities in Wellawatha, Dehiwala, Modera and Mattakkuliya fish landing centers.
Published reports by the Department of Archeology were also used to assess the impacts on
archeological and cultural resources. Data on business activities in Fort and Petah, cost of municipal
services, assessment rates and tax structures were collected form the CMC. Second, a series of
depth interviews were also conducted with leading hoteliers operating in immediate vicinity of the
project, policy makers and administrators to illicit information on potential impact of tourism, urban
development, investment promotion, business development and trade relations.
The socio‐economic study related to sand exploration sites was conducted using structured
questioner (Annex V), structured interviews with fishers and semi structured interviews with key
informants of the fishing community. In addition the participatory rapid appraisal (PRA) methods
were applied to extract qualitative data from stakeholders. The updated statistical information of
the fishing community was collected from the Department of Fisheries in Negombo.


1.6 Main beneficiaries
1.6.1 Importance of Western Region Development
A key objective of the recently created Ministry of Megapolis and Western Development is to separate
the Western region of Sri Lanka from the other regions to promote a higher rate of growth, which will
not only benefit the Western Region, but also other regions through backward integration. According to
the CESMA Plan of 2004: “The spill over effects from a strong economic region with the capability of
launching investment into other regions will lead to an expansion of other economic activities. The fast
development of the Western Region is expected to lead to higher production of goods and services in
other regions which will in turn lead to higher economic growth for the country as a whole”. Therefore it
is envisaged that the initiatives of the newly formed Ministry of Megapolis & Western Development will
spill over to other regions, reducing regional economic disparities.
The Colombo Port City is expected to become a catalyst in the economic growth of the Western Region
of Sri Lanka with multiplier benefits from the project positively impacting the regions.

1.6.2 Key Economic Benefits from Colombo Port City
The key benefits form the Colombo Port City during the reclamation phase of the project are described
below:
(a) A foreign direct investment (FDI) of approximately US$ 1,400 million, the largest private
investment by any company in Sri Lanka, local or foreign, in a single project: FDIs has significant
economic benefits to Sri Lanka’s balance of payments, technology transfer, local employment and
value creation.
(b) Benefits of an investment by one of China’s largest companies, CCCC, and prospects of further
investments by this company, related Group companies and other companies from the region:
CCCC, the parent company of the Project Company, is ranked No 187 among global Fortune 500
companies having assets of over US$ 100 billion and turnover per annum of over US$ 60 billion.
Majority owned by the Government of China, CCCC is a public company listed on the Hong Kong
stock exchange. It is China’s largest port design and Construction Company and the largest
dredging company in the world. The Group is also the leading company in the world for design
and construction of roads and bridges and the leading manufacturer of container cranes in the
world, with 75% of the global market share. The Group has 15 years experience in Sri Lanka
having successfully competed 28 projects valued at $3.4 billion.
(c) Long term nature of the investments by CCCC: The Port City project does not provide any returns
to the investor in the first 5‐8 years from project implementation. In fact the return on
investment and payback from the project to the investor is in excess of 15 years.
Notwithstanding, CCCC has expressed an interest in building Sri Lanka’s largest office tower on
reclaimed land in Port City upon completion of the required Phase 2 EIA, thus establishing the
company as a long‐term investor in Sri Lanka
(d) Value of land: The Colombo Port City is estimated to contain around 173 ha of marketable land.
These will be leased/sold to third party developers in keeping with applicable laws and at market
prices jointly decided by the GOSL and Project Company. The market value of the 173 ha of new
marketable land, based on the current average market price of approximately Rs 9 million per
perch, can be estimated as follows
 Value of UDA/Government land of 63 ha at current market prices: US$ 1.6 billion or Rs 225
billion
 Owning this land on a freehold basis will considerably strengthen the balance sheet of the
UDA.
 Value of 110 ha of land to be allocated to Project Company is US$ 2.8 billion
(e) Employment and Technology transfer: The Project Company employed over 1550 direct staff,
almost all Sri Lankan, including 60 Sri Lankan professionals and engineers. (This number has

reduced by 80% during the suspension period). As explained in greater detail later in this SEIA
report, the direct and indirect employment potential with the recommencement of construction
would be around 6400 representing skilled, unskilled, technical and managerial categories. The
Project has also employed best in class overseas and local consultants for the various aspects of
design and monitoring aspects of Port City.

The key benefits form the Colombo Port City after the reclamation phase of the project will be covered
in greater detail in the Phase 2 EIA study. These include:
 Creation of higher paying service sector jobs through new investments in buildings and
infrastructure at Port City and the attraction of new businesses.
 Establishing Colombo as a business, financial and tourism hub of South Asia
 Creation of public amenities such as parks, theme parks and other recreational facilities within
Colombo’s CBD for all strata of society to enjoy.

1.7 Applicable laws and regulations
The Project must conform to the National Environmental Impact Assessment requirements identified
below. In addition, there are a number statutes and regulations that are applicable (and not applicable)
to the project, which have been taken into account during the planning and development stages. These
applicable/non‐applicable laws and regulations are discussed in the paragraphs below.
1.7.1 Sri Lanka Lands Ordinance and UDA Act No 41 of 1978
The Hon. Attorney General has opined that the UDA cannot be a signatory to the Project Agreement
replacing the SLPA as it lacks the legal capacity under the UDA Act. This is in view of the fact that upon
creation of new land by reclamation of the sea the entire Port City land will be gazetted under the Sri
Lanka Lands Ordinance, a subject matter falling under the purview of His Excellency the President in
terms of the said Ordinance. The UDA could therefore declare the land reclaimed by the Port City
Project as an “Urban Development Area” only after the reclamation process is over and a declaration is
made under the Lands Ordinance. Accordingly, prior permission from the Land Commissioner prior to
completion of reclamation does not arise
1.7.2 National Environmental Act No. 47 as amended by Act No. 56 of 1988 (NEA)
National Environmental (Amendment) Act No. 56 of 1988 of Sri Lanka stipulates EIA as a mandatory
requirement for establishment of various large scale developmental projects in Sri Lanka and assigns
regulatory functions to the Central Environmental Authority (CEA).
According to Part IV C of the above mentioned amendment act, all "prescribed" development
projects are required to be subjected to Environmental Impact Assessment.
The National Environmental Act further stipulates that approval for all prescribed projects shall have
to be obtained from the appropriate project approving agencies concerned or connected with such
prescribed project. Central Environmental Authority (CEA) is the PAA in present case.
EIA provisions are also included in the Fauna and Flora (Amended) Act No. 49 of 1993. According to
this Act, any development activity of any description what so ever proposed to be established within
one mile from the boundary of any National Reserve, is required to be subject to EIA, and written
approval should be obtained from the Director General, Department of Wild Life Conservation prior
to implementation of such projects. Although the EIA is applicable for the project, the provisions of
Fauna and Flora (Amended) Act No. 49 are not applicable as there are no National Reserves within
one mile from the project boundary.


1.7.3 Coast Conservation Act No. 57 of 1981
The Coast Conservation Act No. 57 of 1981

together with the Coast Conservation
(Amendment) Act, No. 64 of 1988 and Coast
Conservation (Amendment) Act, No. 49 of
2011 governs the Coastal Zone. This Zone
comprises mainly “the area lying within a
limit of three hundred meters landwards of
the Mean High Water line and a limit of two
kilometers seawards of the Mean Low
Water line”. Any person desiring to engage
in a development activity within the Coastal
Zone will be required to obtain a permit
issued by the Department prior to
commencing the activity.
The EIA process is part of the permit Coastal Zones of Sri Lanka

procedure mandated in Part II of the Coast
Conservation Act (CCA). Section 16 of the Coast Conservation Act (CCA) confers on the Director
General of Coast Conservation and Coastal Recourse Management Department (CC&CRM), the
discretion to request a developer applying for a permit (to engage in a development activity within
the Coastal Zone) to furnish an Initial Environmental Examination or Environmental Impact
Assessment relating to the proposed development activity. The CCA does not however specify how
and when this discretion should be exercised. The Coast Conservation and Coastal Recourse
Management Department (CC&CRM) interprets this provision as requiring an EIA when the impacts
of the project are likely to be significant.
However, the list of “prescribed projects” published in the Gazette Notification No. 772/22 dated
24.06.1993 under the National Environmental Act states that the CCA applies to those prescribed
projects only if they are located wholly within the Coastal Zone.
Nevertheless, as the Coast Conservation Act states that it is established to regulate and control
development activities within the Coastal Zone, the Coast Conservation and Coastal Recourse
Management Department is the final authority to determine whether to permit a development
activity in terms of the CCA, even though such activity may be required to go through the approval
process laid down in the NEA.
1.7.4 Mines and Mineral Act No.33 of 1992 (MMA)
According to Section 12 of MMA, Geological Survey and Mines Bureau (GSMB) is responsible to regulate
the mining activities in Sri Lanka.
1.7.5 Marine Pollution Prevention Act No. 59 of 1981
As per requirements of the Marine Pollution Prevention Act No. 59 of 1981, all ships that enter the
territorial waters of Sri Lanka should comply with appropriate measures for preventing and controlling
pollution of the sea from a wide range of sources ranging from sewage to harmful chemicals. This
act enables carrying out the requirements and conditions stipulated in the international convention for
prevention of pollution from ships (MARPOL Convention) to which Sri Lanka is a signatory.
Therefore, ships and barges which supply equipment and machinery for the proposed development
should comply with the provisions of the Marine Pollution Prevention Act 59 of 1981. The executing
agency of the act is the Marine Pollution Prevention Authority of Sri Lanka. The said Act requires that
developments such as Port City should include sufficient facilities for pollution abatement of marine

waters as well as contingency measures in place to cope with the failure of such systems. The
contingency measures are also helpful to prevent pollution of the coastal zone from oil spills.
The Marine Environment Protection (Dumping at Sea) Regulation No 1 of 2013 is not applicable to the
Project Company or its dredging contractor. According to the Marine Pollution Prevention Act No. 35 of
2008, it is clear that MEPA is tasked with prevention and control of pollution arising out of ship based
activity and shore based maritime related activity in the territorial waters of Sri Lanka or any other
maritime zone, its fore‐shore and the coastal zone of Sri Lanka. There is no provision for the Project
Company or its dredging contractor, which engages in reclamation of land for commercial development
by dredging sand and creating land and beaches from such sand to apply for a license or permit under
the above regulation.

1.7.6 The Antiquities Ordinance No. 9 of 1940 (now Act) and the subsequent amendments, in
particular Antiquities (Amendment) Act No 24 of 1998
Under the requirements of Sections 43A and 43B of the Antiquities (Amendment) Act No. 24 of
1998, separate approval is required from the Director General, Department of Archaeology, for the
satisfactory completion of an Archaeological Impact Assessment. This is implemented through the
'Project Procedure Regulation No.1 of 2000 (published in Gazette Extraordinary No. 1152/14, October
2000).
1.7.7 Civil Aviation Authority Act No 14 of 2010
The regulation and control of matters related to civil aviation and aviation in general, is in terms of the
Civil Aviation Authority Act No. 14 of 2010 (hereinafter referred to as “the Civil Aviation Authority Act”
and/or “the Act”). Section 2 of the Act states that the Chicago Convention shall govern all activities
relating to civil aviation in Sri Lanka. Further, Section 3 of the Act states that “the provisions of this Act
shall apply in respect of all activities relating to civil aviation within the territory of Sri Lanka” and in
particular, in respect of inter alia registration of aircraft, regulation, administration and safety oversight
of activities relating to civil aviation carried out within the territory of Sri Lanka.

Section 32 of the Act states as follows: “32(1): No foreign military or state aircraft may enter the
territory of Sri Lanka, without a special permission or authorisation for the same being obtained from the
Secretary to the ministry of the Minister in charge of Defence. 32(2): No foreign civil aircraft may enter
the territory of Sri Lanka without a special permission or authorisation from the Director‐General”.

For the purpose of the Chicago Convention the territory of a State shall be deemed to be the land areas
and territorial waters adjacent thereto under the sovereignty, suzerainty, protection or mandate of such
State”. Article 1 of the Chicago Convention states that: “The contracting States recognise that every
State has complete and exclusive sovereignty over the air‐space above its territory”. Therefore, in terms
of the Act, the Director‐General of the Civil Aviation Authority and/or the Minister in charge of the
subject of aviation have exclusive control over inter alia the registration of air‐craft and aerodromes,
licensing, the determination of air‐worthiness of aircraft, seizure of aircraft and the flight schedule of
aircraft within the territory of Sri Lanka.

The reclaimed land has no impact on regulation and control of matters related to civil aviation and
aviation in general, in terms of the Civil Aviation Authority Act No. 14 of 2010. This is in view of the fact
that upon creation of new land by reclamation of the sea the entire Port City land will be gazetted under
the Sri Lanka Lands Ordinance, a subject matter falling under the purview of His Excellency the President
in terms of the said Ordinance.


1.8 Conformity to Coastal Resources Management Plan and any other development/ conservation
plans of the area
1.8.1 The Coastal Zone Management Plan (CZMP)
The CZMP was developed in 1990 and revised in 1997 and 2004. The aim of the CZMP (2004) is to
regulate development within the jurisdiction of the CCD in order to ensure that development pressures
are not detrimental to coastal processes. In order to achieve this, the CZMP has identified areas suitable
for development activities and corresponding setback limits for intended infrastructure.
The Port City Development does not fall within the framework of a routine development activity on land
within the coastal zone. The specific environmental and social concerns relating to the implications for
coastal management of the proposed Port City Development have been identified by the CCD in the
scoping of the ToR for this SEIA study.
1.8.2 The Master Plan for Coastal Erosion Management
This is the key plan developed by the CCD to address the growing problem of coastal erosion in Sri
Lanka. It was first developed in 1986 and revised in 1993. The CCD periodically reviews the plan in order
to ensure that a consistent approach is adopted for coast protection. The CCD upgraded the Plan in
2000 under the Coastal Stabilisation Component of the ADB funded Coastal Resources Management
Plan (CRMP).
The proposed project does not impact on any aspects connected to the CRMP. It is pointed out later in
the SEIA report, in keeping with studies carried out and recommendations of Lanka Hydraulics Institute
(LHI), the process of sand extraction would occur at depths of 15m or more, thereby having no impact
on coastal erosion.
1.9 Approvals needed from relevant agencies and any conditions laid down by such agencies for
reclamation, sand and rock extraction
1.9.1 Geological Survey and Mines Bureau
The project would require the SLPA/UDA to assign the exploration and mining licenses from the GSMB
for the sand borrow areas identified by the GSMB to the Project Company. Prior to the commencement
of construction on 16th September 2014, the SLPA obtained from GSMB the following licenses and
assigned them to the Project Company:
 Exploration License No EL/177 for Map No 59 dated 21st June 2011. (Later an Industrial Mining
License No: IML/A/HO/832 was issued by the GSMB to SLPA for the same area).
 Exploration License No: EL/281 dated 8th November 2013.
This SEIA study is being carried out for the area identified in the above exploration licenses for the
purpose of sand extraction.
1.9.2 Urban Development Authority
The Hon. Attorney General has given an opinion to the Cabinet appointed Officials Committee for Port
City that the UDA Act does not permit the declaration of any land area as an Area of Authority under the
UDA Act until the reclamation is completed and the reclaimed area is gazetted under the Lands
Ordinance as territory of Sri Lanka.
1.9.3 Department of Coast Conservation & Coastal Resources Management
Upon the SEIA process being concluded satisfactorily, as the Project Approving Agency for the SEIA, the
CCD will under Part III Section 14 of the Coast Conservation & Resource Management Act No 57 of 1981,
shall issue a Permit for Development for the reclamation works to re‐commence.
Unless extended, the original Development Permit issued by the CCD for reclamation would lapse.


1.9.4 Colombo Municipal Council
Consents from the CMC would not arise for the reclamation stage of the project and will be obtained
during the Phase 2 EIA
1.9.5 Marine Environmental Protection Authority (MEPA)
The SLPA, on behalf of the Project Company, obtained approval issued under the Marine Pollution
Prevention Act No 35 of 2008 for the oil spill contingency plan on 18th December 2014. In this regard the
applicable law in connection of reclamation of land from the sea is as follows:
 Any development activity within the coastal zone needs a permit under the CCD Act as mentioned
above. There is no specific provision in the Marine Environmental Protection Act that requires a
permit to be obtained for such development activities.
 Regulations under the MEPA Act do not apply to the Port City Project and therefore, the
SLPA/UDA is not bound to obtain any further permit from MEPA.
1.9.6 Department of Fisheries
It is intended that the Department of Fisheries with the assistance of other relevant Government
agencies and local authorities shall be assigned the responsibility of managing the disbursement of
funds allocated to the relevant Ministry for uplifting the socio‐economic conditions and any loss of
fishing grounds of fishermen impacted by the sand extraction.
Furthermore, it is proposed that the routes to be travelled by the dredgers of the Project Company may
be gazetted under the Fisheries & Aquatic Resources Act.
1.9.7 Board of Investment of Sri Lanka
The Agreement between the Project Company and the BOI was signed on 11th November 2013. The BOI
Agreement may require certain amendments at the time the UDA steps into the role of the SLPA under
the Development Agreement of 16th September 2014.
1.9.8 Strategic Development Act
Notification under Section 3(2) of the Strategic Development Projects Act No. 14 of 2008, published in
the Gazette Extraordinary No. 1879/6 of 11th September 2014, and Notification under Section 3(4) of
the Strategic Development Projects Act No. 14 of 2008 was published in the Gazette Extraordinary No.
1889/6 of 17th November 2014. These Gazette notices were published following Cabinet decision dated
13th January 2014 approving the proposals made in Cabinet Memorandum No. MP&H/2013/21, dated
20th September 2013, concerning the Colombo Port City Project. By this Cabinet decision the Colombo
Port City Project was approved inter alia as a Strategic Development Project.
1.9.9 Land Commission’s Department
Approval from the Land Commissioner’s Department as stated above does not arise for at the
reclamation stage of the project, when reclaiming a sea area.
1.9.10 Department of Archaeology
SLPA has obtained Letter of Approval from the Department of Archaeology dated 18th July 2012
following the Archaeological Impact Assessment of the Colombo Port City Development Project done by
the Underwater Archaeology Unit of the Department of Archaeology from November 2011 to February
2012 pursuant to a request made by the SLPA by letter dated 22 June 2010.
Furthermore, the Ministry of Megapolis and Western Development has obtained the following consents
from the Department of Archaeology by way of letter dated 21st October 2015:
1. During the period of reclamation, the Project Company will be subject to the supervision of the
Underwater Archaeology Unit of the Department of Archaeology
2. Reclamation should occur only in areas indicated in the application submitted to the Department

3. If at any point in time archaeological artefacts are discovered, the Project Company should inform
the Underwater Archaeology Unit of the Department of Archaeology and immediately cease to
reclaim of dredge in the specific area the discovery was made.
1.9.11 Road Development Authority
Approval of the RDA/PRDA/LA (if required) for transport of quarry material will be the responsibility of
the individual quarry owners who will supply the material to the Port City site. However, GSMB
Technical Services (Pvt) Ltd, who was appointed by the Project Proponent for the purpose of carrying
out the quarry material extraction study has recommended several mitigation measures as explained in
Chapter 3, 4 and 5 of this SEIA to minimise the potential impacts on road transport system.
As mentioned earlier, the Traffic Impact Assessment for Colombo Port City will be carried out during the
Phase 2 EIA.


CHAPTER 6
EXTENDED COST‐BENEFIT ANALYSIS

6.1 Introduction
The development of Port City plays an important role in promoting growth in the relatively small
economy of Sri Lanka. The benefits and objectives of reclaiming land to extend the Colombo Central
Business District has been elaborated elsewhere in this report. The main purpose of Colombo Port
City (CPC) is to create a regional business hub, a city with a distinct brand with high quality public
spaces and infrastructure facilities, attractive to local and international developers and investors.
The structural changes of the economy over the past ten years indicate the dominance of service
sector economic activities, particularly in the areas of tourism, ICT, ports and shipping, retail,
transport and financial services. The CPC has the capacity to contribute towards service sector
oriented growth and development by attracting high profile FDI’s and generating wide range of direct
and indirect benefits to the national economy.
The CPC project is to be implemented over a 25‐year period. Large‐scale land reclamation involves
numerous complex social, environmental and economic effects. These social and environmental
costs are difficult to measure and to value. The proposal to create land reclaimed from the sea at
this location was made technically feasible due to construction of breakwater (around 1.5km in
length perpendicular to the shore‐line) of the Colombo South Port expansion.
The CPC does not involve replacing any economic activities in the project location or its immediate
neighborhood. Thus, the benefit generated by the entire reclaimed land becomes an additional asset
to Sri Lanka as a result of a Foreign Direct Investment (FDI) project. In summary, the qualitative
benefits of CPC can be summarized as follows:
(a) The creation of additional oceanfront land designed to expand the CBD of Colombo that will
enable an integrated master plan to be developed. This is expected to establish the city as a
centre for finance, tourism, shopping and entertainment, attracting new investments and
new buyers of real‐estate and tourists who will spend more money and entrepreneurs who
will invest in new businesses in Sri Lanka
(b) The GOSL is able to attain some of the vision and objectives stated in the CESMA plan of
2004, though without the burden of spending state resources on the development or
relocating the Jaye Container Terminal’s port related activities as envisaged in the CESMA
Plan
(c) Colombo becoming a destination for tourism will smoothen out the cyclicality of current
tourist arrival patterns and have a beneficial impact on resort hotels around major tourist
attractions in Sri Lanka such as the Cultural Triangle.
(d) Oceanfront land within CBDs of emerging business cities encourages finance, commerce and
residential living within close proximity to each other. Colombo’s CBD has only fragmented
undeveloped land parcels remaining with limited views of the ocean on all fronts.

The CPC project therefore creates new land that will generate economic returns to the Government,
the investor, the city and the country as a whole.

6.2. Identification of Potential Impacts

Although reclamation projects are generally regarded as an incremental asset to a nation, the
extended economic impact of a project such as CPC that intends to position Colombo as a regional
CECB ‐ SEIA Report – Proposed Colombo Port City Development Project‐ December 2015 Chapter 6‐ Page 1

business and tourism hub needs to be assessed in terms of social, economic and environmental
factors.
The negative impacts of the project cover several physical impacts e.g. construction work related
activities, and activities at the project location having impacts on its immediate neighborhoods and
the environment. The positive impacts of the project include employment creation, enhanced
foreign investment, positive revenue generation to the government, transfer of technology and value
added contribution to the national economy. Once the physical, socio‐economic and environmental
impacts of the CPC are identified and quantified, the next step of analysis is to monetize these
impacts with economic prices.
The application of shadow prices to reflect the true economic values of costs and benefits of the
project was carried out using economic conversion factors. Ideally, conversion factors should be
frequently updated to take into account changes that might occur through time. Unfortunately,
those for Sri Lanka were calculated almost 30 years ago and they are not appropriate to be used for
Cost‐Benefit‐Analysis valuations in 2015 because significant changes have taken place in the
economic structure of Sri Lanka over the past 30 years. Thus, the conversion factors developed by
the National Planning Department in the 1980s were adjusted to reflect changes in the economy and
the impact of taxes and subsides. Several conversion factors were used to convert the market prices
to economic prices and conversion factors applied for material, labour, technical, and executive level
occupations were 1.000, 0.755, 0.722 and 0.776 respectively.
In carrying out the cost‐benefit analysis, the standard methodology of comparing with an alternative
project location was not considered as CPC is constructed south of the east‐west breakwater of the
Colombo South Harbour (CSH). It is a location where there will be a natural accumulation of sand. It
is for that reason that this location had been identified for this type of development by all
development plans including the CESMA Plan commissioned in 2003‐04, developed around 7 years
prior to commencement of construction of CSH. This apart, there is no feasible alternative (technical
and financial) to creating oceanfront lands, with all the related benefits pointed out earlier, within
the Colombo Central Business District.
The development of the Port City will not create a littoral barrier. The barrier itself is already present
via the east‐west breakwater of the CSH. Undertaking reclamation in an area where sand will
naturally accumulate with time is a very common practice in coastal engineering and not technically
challenging. In view of these unique characteristics of the proposed project site, and site having
already been identified for the purpose of reclamation for extension of the Colombo CBD, the
standard methodology of using an alternative project location will not be considered in carrying out
the extended cost‐ benefit analysis.

6.3. Multiplier effects and Long‐term outcomes
The proposed CPC has the capacity to contribute significantly to the economic well‐being of the city
of Colombo and the Colombo Metropolitan Region (CMR). The long‐term employment figures
include jobs at the CPC, jobs generated by multinational firms, jobs supporting local purchases made
by local and foreign employees at CPC at grocery stores, retail outlets, restaurants, local government
services, schools, hospitals, etc. and firms that provide services to the CPC companies such as office
supplies and equipment, utilities, communications and professional services.
The project has the potential for generating wide range of indirect socio‐economic benefits such as
attracting high profile FDI and thereby creating direct employment mainly for professional and
technical occupations in areas such as Information Communication Technology (ICT), banking, fund
management, investment banking, real estate, retail and tourism sub‐sectors. The employees of
these occupational groups are expected to be well paid and have the capacity to create indirect

employment in the national economy due to high disposable income. The proposed project also has
the capacity to attract high profile FDI particularly for high value added service sector investments
and headquarters of export manufacturing establishments. The immediate impact of such
investments would be an increase in GDP and also an increase in foreign exchange earnings.
In addition to job creation, other long‐term outcomes include fostering modern management
practices in various fields that will upgrade the living standards of Colombo. The project will also
provide socio‐economic benefits through the utilization of world‐class residential spaces. Additional
economic benefits could also be realized through an increase in higher paying jobs related to
international trade and the movement of greater amounts of imports and exports through the
Colombo port.
As revealed in a recent study (World Bank, 2015), if managed well, urbanization can lead to
sustainable growth by increasing productivity, allowing innovation and new ideas to emerge. It
further states that better cities can help reduce vulnerability to poverty, improve living conditions,
and create environment for more and better paying jobs. Income generation is comprised of
investment and expenditure by the CPC, the total employee payroll and benefits of business
establishments. However, these factors alone do not represent the total economic contribution of
the project to the national economy. Economic studies find that many additional jobs are created
indirectly as a result of the financial transactions of a business, its suppliers, customers and
employees. For example, Job creation during the construction of the reclamation and protective
works of CPC would be more than 1700 direct jobs per annum while its impact on indirect
employment would be around 4500. In addition, a further 4500 would be indirectly employed at the
quarry sites and quarry supply chain during the reclamation.

The predicted new job creation would be around 15000 per annum during the 1st 10 years of
business operations (i.e. with the commencement of real estate developments on the reclaimed
land). Its impact on indirect employment would be around 22500 per annum in the first 10 years of
business operations based on 1.0:01.5 ratio of indirect employment. At the end of 20 years of
business operations the total direct employed will be assumed to about 62,000 and indirect about
30,000 (ratio direct to indirect is 1:0 – 0.5)

6.4. Extended Cost‐Benefit Analysis (CBA)

CPC (the reclamation stage only) is a FDI project without local capital. Local capital would be incurred
for the provision of infrastructure, which will be priced at market rates giving a return to utility
providers. This aspect will be covered in greater detail in the Phase 2 EIA.

Notwithstanding, its impact on the national economy was taken into account by way of valuing cost
of factor services both at market prices and at shadow prices. In carrying out the extended CBA,
firstly, all quantifiable major costs and benefits of the project were valued at market prices. The
direct benefits of the CPC to the GOSL was defined to include lease/sale income from 63 hectares of
land allocated to the GOSL to developers, direct and indirect employment in construction work and
quarry sites, income from municipal service taxes, direct and indirect employment, consumption
effect of foreign employment and backward linkage effect of foreign firms (e.g. purchase of material
and other service inputs). The key cost items considered in the CBA for the reclamation project
envisaged under this SEIA study include construction costs, opportunity cost of material (e.g. sea
sand), loss of royalty income to the government in providing sea sand and environmental costs.


6.4.1. Extended Cost‐Benefit‐Analysis for the reclamation stage
The reclamation stage of CPCDP involves reclaiming sea sand from the Indian Ocean in proximity to
the Galle Face Green. Reclaimed land amounting to about 173 hectares will be sold/leased to local
and foreign real estate developers for a variety of activities such as office, residential, retail, and
leisure activities. The reclamation stage is expected to take approximately three years to complete.
The Extended Cost‐Benefit‐ Analysis has been based on the financial analysis of overall project, while
taking into account the environmental and social costs and benefits as a result of the implementation
of the project.
The key parameters adopted and key assumptions on costs and benefits made in the calculation for
the Cost‐Benefit‐Analysis are presented in Appendix 3, and the details of the calculation are
presented in Appendix 4. Appendix 3 describes how the anticipated environmental impacts
identified in Chapter 4, the mitigation measures suggested in Chapter 5, and the monitoring
measures recommended in Chapter 7 have been taken into consideration in the calculation
presented in Appendix 4.
A broad summary of financial, economic and environmental Costs and Benefits is presented below.
Table 6.1: Descriptions of Financial, Economic and Environmental Costs and Benefits.
Reclamation stage only Financial Financial + Financial + Economic +
Economic Environmental
Internal Rate of Return‐IRR % 8.66% 8.9489% 8.861%
Net Present Value – NPV USD m 350 3871 3770
Benefits to Cost Ratio 1.17 1.198 1.18

The underlying analysis behind the above numbers are presented in paragraphs below

6.4.1.1. Benefit streams
a) Financial benefit streams
Land sales
After reclamation, the total land available for sale is approximately 173 hectares. It is estimated that
land sales will generate about USD 6.0 billion over 20 years, considering a conservative base land
price of USD 2,300 per square metre (Rs. 8 million per perch) and a low land price inflation of 3% per
annum. Land will be available for sale from the fourth year.

b) Economic benefit streams
Employment creation
One of the key benefits of the CPC is its ability to create direct and indirect employment. This would
lead to further economic growth in Sri Lanka as employee wages will drive consumption and capital
expenditure, thus benefitting a range of industries.
During the reclamation stage, it is estimated that approximately 1,800 direct jobs will be created, of
which about 80% will be sourced from Sri Lanka. A conversion ratio of 0.776 has been used when
considering unskilled labour.

Construction of the CPC and the creation of direct employment will also lead to the generation of
many indirect jobs. CPC requires about 2.8 million m3 of granite for the construction of the
breakwater and protection work. This is estimated to generate about 3,000 skilled and 1,500
unskilled jobs at the independently owned quarry sites in the country. Hence indirect jobs via quarry
sites are estimated at about 4,500.

Consumption effect of foreign employment
As mentioned above, during reclamation about 20% of the labour force is slated to comprise foreign
nationals. They are expected to spend at least a third of the wages (likely to be higher than local
wages) in Sri Lanka and consume a variety of products and services, which is likely to drive growth in
domestic industries.

c) Environmental benefit streams
In the long term, the construction of the breakwater of CPC will benefit the fishing industry in Sri
Lanka. According to research, fish temporary avoid the immediate vicinity of construction activities.
However, on completion these developed structures create potential foraging and spawn habitats for
fish thus creating a diverse biological community.

6.4.1.2. Cost streams
a) Financial cost streams
Construction cost
The reclamation cost is estimated at USD 1.4 billion.
Sales and General expenses
During the reclamation stage to effectively generate land sales, CPCDP will undertake a
comprehensive global marketing campaign to target key stakeholders. Moreover, skilled and
operational personnel will be employed to manage operations. As such, approximately 3.0% of land
sale revenue is to be allocated for these activities.
Debt to Equity
A debt to equity ratio of 70:30 is assumed for the project, which is not unusual for real estate
projects

b) Economic costs streams
Loss of revenue to the government
The CPCDP requires approximately 65 million m3 of sea sand. At present the Sri Lanka Land
Reclamation and Development Corporation provides sea sand for construction purposes for which
royalty, Nation Building Tax (NBT) and Value Added Tax (VAT) are required to be paid to the
government by the buyer. For CPC, the developer will be utilising its own equipment to dredge the
sea sand during reclamation stage, as such, the government has decided to forgo the applicable
royalty and taxes. The economic cost to the government of this waiver is estimated at roughly Rs.5.3
billion.
Income support to fishermen

There is no fishing ground in the project location and no fishing boats are operating in the
reclamation area. A benefits program to fishermen will be implemented by the government to the
fishermen located in the sand borrow areas. For purposes of this analysis, the total amount over the
3 year reclamation period is assumed at Rs. 1,000 million. (Note this figure may vary as the benefits
program will be subject to review after 1 year by the GOSL and reduce significantly assuming the
SLLRDC borrow site will be used to mine sand instead of SLPA Site 1).
As noted earlier, there is no fishing activity in the Port City location, which covers a sea area of 1km.
The closest fish landing areas are 8‐10km away from the project site. Thus, development activities of
CPC will not negatively affect the fishing communities living in the Modara/ Mattakkuliya (distance of
8 kms) or Dehiwala‐ Mount Lavinia (distance of 10km) fish landing centers. The fishermen living in
both locations mostly (about 64%) use mechanised crafts for fishing and hence the CPC activities
would not restrict fishing activities.
Impact on Hotels
The impact on tourism industry was also assumed to be not significant as it is very unlikely that the
activities of the proposed project would significantly impact the business activities of the two hotels
located near the CPC in the medium to long term. (I.e. Kingsbury and Galadari hotels). However, it is
plausible that during the period when construction takes place close to Chethiya Road/Kingsbury
hotel road, there will be a short‐term impact on the hotel. However, these impacts will be mitigated
and will generate medium to long term benefits in view of the following:
(a) Foreign consultants to CPC choosing to stay at the nearby two hotels during construction due
to the close proximity to CPC’s project office and head office in Colombo
(b) The construction of the linear park close to the Kingsbury hotel as shown in the master plan
(c) The use of adjacent hotels by investors and consultants who intend on becoming real estate
developers within CPC and during construction of new developments
(d) Longer term benefits of Colombo emerging as a business and tourism hub

c) Environmental cost streams
This section identifies some of the environmental impacts caused by CPC, and where possible,
quantified in monetary terms their cost for the inclusion in the extended cost‐benefit analysis.

Archeological and Cultural Aspects
According to the estimate prepared by the Underwater Archeology Unit of the Department of
Archeology (2012), the potential loss to archeological and cultural aspects is estimated at Rs.1.2
million for the project.
Possible accident costs
Possible accident costs is estimated at Rs.178.5 million per year during reclamation based on the
insurance cost of the EPC contractor, considering construction activities as well as transporting rocks
and other construction material, which may lead to deaths or injuries of workers.
Mitigation costs
Environmental mitigation cost is estimated at Rs.63.5 million, which is computed on the basis of Rs
21.2 mn for each of the first 3 years of construction
Monitoring costs
Based on the EMP monitoring schedule and the monitoring test rates, the monitoring schedule is
created based on the Environmental Management Plan, which details parameters air, noise,

vibration, water quality, cultural heritage, ecology and fish habitats, beach profile, bathymetry,
photographic survey and satellite images. For each parameter, EMP has determined monitoring
frequencies. As such, a total cost of roughly USD 1.7 million is estimated for the duration of the
project.

v) Aquaculture resources
As noted earlier, since there are no aquaculture activities going on in the reclamation area or Sand
extraction areas, the environmental cost of aquaculture is negligible. The biological environment also
consists of few species, which are not utilized economically. Most regions of the underwater reef are
silted and do not provide a conducive environment for biota. Hence the environmental cost of
biological resources at the reclamation site is also negligible
The summary of the above mentioned environmental costs is given below in US$
Environmental costs Total (US$ mn)
1. Aquaculture Resources 6.8
2. Archeological and Cultural Aspects (rounded off) 0.0
3. Possible accident costs 3.8
4. Mitigation costs 0.4
5. Monitoring costs 1.7
Total 12.7

6.4.2. Extended Cost‐Benefit‐Analysis for the CPC
The following section details an extended CBA for the CPC under a hypothesis of 20 years of business
operations. Compared to the reclamation stage, financial costs and benefits remain unchanged
though there is an increase in environmental costs. However a significant improvement in economic
benefits accrues to Sri Lanka from the overall CPC over its lifetime of 20 plus years.
The following table summarizes key financials and the descriptions relating to incremental economic
and environmental costs and benefits (after the reclamation stage). This aspect is subject to further
study and evaluation under the Phase 2 EIA.
Table 6.2: Descriptions of Incremental Economic and Environmental Costs and Benefits (after the
Reclamation Stage)
Whole project (3 years of Financial Financial + Financial +
construction + 20 years of Economic Economic +
business operations) Environmental
IRR % 8.7% 15.64% 15.55%
NPV USD m 350 2,358 2,347
Benefits to Cost Ratio 1.17 2.04 2.03


The analysis does not provide detailed estimates for possible revenue streams for more than 23
years as it is difficult to predict such revenue sources due to the uncertainty surrounding the various
parameters affecting both cost and revenue estimates.

6.4.2.1. Economic benefits
Employment creation, the effect of foreign employment and the backward linkage outcome of
foreign firms, value added contribution of local firms and the impact on indirect employment were
taken into consideration in evaluating the benefit streams of the project.
CPC will continue to be a significant job creator, with a conservative basis of about 2,500
employment opportunities generated in its first year of business operations and thereafter rising to
over 65,000 in the 23rd year. As mentioned, jobs will be created in commercial activities, office
complexes, hotels and in other areas such as leisure, hospitals, schools, convention centres etc. As in
the reclamation stage, a significant number of indirect employment opportunities will be created.
The value added contribution to the country from businesses locating at the Port City is another
significant benefit. Assuming conservative local wage estimates and wage share of total value add at
22%, the contribution to Sri Lanka from firms in the CPC is likely to rise from about Rs.5.0 billion in
the first year of business operations to roughly Rs.130 billion per annum, at full year of operations
(year 23‐25). Moreover, backward integration as a result of foreign companies consuming materials,
service facilities etc. will also contribute to the local economy (conservatively estimated at 12% of
foreign employees wages)
Benefits from the consumption effect of foreign workers will continue to accrue to domestic
industries and is valued at almost Rs.24 billion. Further municipal councils will benefit from fees
related to annual rates, licenses and trade licenses. The estimation of municipal service cost and
revenue are based on existing cost data relating to the main business sectors of the Colombo
Municipal City (CMC). The estimated figures capture only the lower‐bound values. Similarly, with the
presence of high profile, multinational organizations the municipal service income could be much
higher.
Additionally, there are benefits that accrue from CPC that cannot be reasonably quantified. These
include benefits from operating a financial hub, boost to industries such as tourism, trade, as well as
from the creation of a favourable image and positive goodwill of Sri Lanka.

6.4.2.2. Economic costs
Note that this section is a preliminary analysis to be further studied during the Phase 2 EIA
i) Operating costs
Cost of municipal services: it is assumed that 35% of the municipal revenue will be utilized for
maintenance purposes of the Port City.
ii) Provision of utilities, waste disposal facilities etc. at boundary.
The cost of provision of utilities including a waste disposal facility that the government may create to
cater to the demand of the Port City is under estimation. For the purpose of this cost benefit analysis,
it can be assumed in the model that the total cost for the Port City is 2.7Km2 x USD18
million/Km2=USD48.6 million, and developed in 4 stages:

Table 6.3: Provision of Utilities, Waste Disposal Facilities etc. at Boundary
Year 5 10 15 20
Investment 18.6 10 10 10
(USD
million)

ii) Provision of road connection at boundary
According to the “Transport and Traffic Study” prepared by the CECB, certain road enhancement and
development projects that will improve connectivity and transport infrastructure to CPC are being
studied. Among these potential road projects, only the following two projects are directly connected
to the Port City and will perform as the main entrance of the Port City. The two projects will be
developed in the fifth and tenth year respectively.
Table 6.4: Road enhancement and development projects
Relevant Road Project Estimated Cost
1. Elevated Port Access Road to Colombo Port USD 250 million
2. Extension of Marine Drive up to Galle Face Roundabout USD 100 million

6.4.2.3. Others
Additionally, there are benefits that accrue from CPC that cannot be reasonably quantified. These
include benefits from operating a financial hub, boost to industries such as tourism, trade, as well as
from the creation of a favorable image and positive goodwill of Sri Lanka.

6.5. Overall Assessment
The post‐war development efforts of the government are aimed at developing Sri Lanka as a dynamic
business hub using its strategic geographical location effectively. This requires participation of high
profile foreign investors particularly to promote high value added service sector oriented economic
activities e.g. financial services, ICT. The spill over benefits of CPC would be skills development and
transfer of technology and access to foreign markets. Proposed CPC will be vital in promoting such
development efforts.
The proposed project has the potential to attract foreign direct investment, create employment
opportunities, and to improve living standards in CMR. Empirical evidence of Thilakaweera (2013) in
the context of Sri Lanka reveals unidirectional causality from infrastructure to FDI in promoting
growth. This finding lends strong evidence in support of CPC as a major infrastructure project in
promoting growth. The social, economic and environmental benefits described in this analysis reveal
that the CPC, in addition to the direct service it will provide locally, would contribute substantially to
the economic wellbeing of Colombo and other districts of CMR. The CPC has capacity to generate
income, creates wealth and employment for the citizens of the country, increase tax revenue and
advance environmental and social wellbeing of Colombo District.


Sri Lanka as a Financial Centre
The dominance of established financial centers has been changing over the past 50 years with the
emergence of more competitive business centers in Asia. With the distinct possibility of India
becoming the next economic power house, Sri Lanka seems to be one of the best financial centers
which could serve investor needs of high growth economies in Asia. With its long standing links with
European countries, Sri Lanka could also be a best financial center for servicing investors originating
from Europe and North America doing business into South Asia
Sri Lanka has a distinct advantage in promoting Colombo as a regional financial center. Proposed
CPC would be a strong positive factor in promoting such a strategy in view of its business friendly
policies, facilities proposed, connectivity and strategic location. The business center of Colombo also
offers several other facilities such as sound legal framework, governing corporate law and
accountancy standards, congenial and relatively low cost living conditions, good ICT infrastructure,
pro‐market policy regime, modern infrastructure, good banking network, educated and skilled labour
force and low cost of living (e.g. Rent Index 13.87) and (Quality of Life Index 25.55 in 2015). Its stock
market operations are being revitalized and the present government is committed to promote both
local and foreign participation in the stock market. The spin‐off benefits of an expanding financial
services sector will no doubt result in increased foreign direct investments and growth in other
sectors of the national economy.

Opportunity to develop both the Old City and the New City
As mentioned earlier, Colombo Port City provides an opportunity for the old and historic part of
Colombo to interface with a modern planned metropolis like no other in developing Southeast Asia.
As the hub of the island’s commercial capital, Fort has had a long history from the 18th century
commencing the time of the Dutch. That explains the architectural heritage of the city, which must
be protected for the benefit of future generations. Some of the key building which deserve special
mention in old Fort are Old Dutch Hospital, Cargill’s and Millers Buildings, Victoria arcade and Grand
Orient Hotel (GOH, 1775), Bristol Building, Gaffoor Building, Times Building, Old Fort Light House,
Clock Tower, General Post Office, Queen’s House, Bank of Ceylon Building, and YMCA Building. They
should be renovated while keeping the old look intact. At present, the preservation of these iconic
buildings is faced with a serious threat of high demand pressure for commercial space. The
emergence of high‐rise buildings in and around Fort has already damaged the majestic appearance of
the old Fort of Colombo and new business activities does not appear to be spreading to outer skirts
of the main business center over the past fifty years.
In spite of various efforts by successive governments to shift some of the government institutions
and commercial centers from the main business center, Fort and adjoining areas continue to attract
investors rather than outer lands of the Colombo City. This is due to cluster based business growth
particularly with respect to urban growth centers. The latest addition to this trend is the emergence
of port cities. These growth centers are characterized by a bundle of most modern services
demanded by high profile investors. On one hand, the proposed CPC would cater to the investor
needs of the emerging business world and on the other hand, it would provide an opportunity for the
government to protect the old city of Colombo for the benefit of future generations. It would also
offer wide range of economic benefits to the country by way of enhancing investor confidence,
attracting foreign direct investment, creation of high quality employment, and a range of other
economic benefits through backward and forward linkages. The new construction provides an ideal
opportunity for the City of Colombo to diversify its operations through multiple sources of business
activities.
CECB ‐ SEIA Report – Proposed Colombo Port City Development Project‐ December 2015 Chapter 6‐ Page
10

In summary, the cost‐benefit analysis using sectorial conversion factors and environmental costs for
the same period revealed that CPC project is a worthwhile investment from both an economic and an
environmental point of view. This is a project that has potential for offering long‐term economic
benefits for Sri Lanka. The project has capacity to attract FDI, promote high value added products
and services, transfer of technology, integration with global markets and creation of high quality
employment opportunities, particularly in the services sector.

11

6.6. Summary CBA
Table 6.5: Summary of the cost benefit analysis


6.7. Sensitivity Analysis ‐ NPV
6.7.1. Reclamation stage
Table 6.6: Sensitivity analysis of Reclamation stage
Description NPV at 6.5% NPV at 8.0% NPV at 10.0%

Discount rate (USD m) Discount rate Discount rate
Fin. Fi+Ec Fi+Ec+Env (USD m) (USD m)

Fin. Fi+Ec Fi+Ec+Env Fin. Fi+Ec Fi+Ec+Env

1. Base case 350 387 377 91 128 117 -153 -118 -128

2. Reduction 234 272 261 -5 32 22 -228 -193 -203

in initial land
price by 5%
3. 153 191 180 -91 -54 -65 -319 -283 -293
Construction
cost
increase by
10%
4. Cross 37 75 64 -187 -150 -160 -394 -358 -368

sensitivity
(scenarios 2
and 3
combined)

13

6.7.2. Reclamation and 20 years of business operations
Table 6.7: Sensitivity analysis of Reclamation & Operational stage
Description NPV at 6.5% NPV at 8.0% NPV at 10.0%

Discount rate (USD m) Discount rate Discount rate
Fin. Fi+Ec Fi+Ec+Env (USD m) (USD m)

Fin. Fi+Ec Fi+Ec+Env Fin. Fi+Ec Fi+Ec+Env

1. Base case 350 2,358 2,347 91 1,660 1,650 -153 986 976

2. Reduction 234 2,242 2,231 -5 1,564 1,554 -228 911 901
in initial land
price by 5%
3. 153 2,161 2,151 -91 1,478 1,468 -319 821 811
Construction
cost
increase by
10%
4. Cross 37 2,046 2,035 -187 1,382 1,372 -394 745 736
sensitivity
(scenarios 2
and 3
combined)

14

CHAPTER 8
CONCLUSIONS & RECOMMENDATIONS

This Supplementary Environmental Impact Assessment SEIA is based on Terms of Reference
issued by the Department of Coast Conservation and Coastal Resources Management to the
Project Proponent, the Ministry of Urban Development, Water Supply & Drainage on 30th
August 2015. Upon the UDA being gazetted under the Ministry of Megapolis & Western
Development, this Ministry was designated as the Project Proponent.

The investor in Port City, China Communications & Construction Company (CCCC), is a public
listed company in Hong Kong and among the world’s largest construction and real estate
companies with assets of over $100 billion. The total foreign direct investment (FDI) in the
reclamation stage of the Port City covered under this SEIA is envisaged at around $1400 million,
the largest ever single FDI approved by the BOI to date. The financial investment in the project
therefore has no Government guarantees.
The project commenced construction on 16th September 2014 at the request of GOSL on the
basis mentioned in this report to coincide with the State visit of the President of China and
continued construction until the Project Company was informed in writing on 6th March 2015 to
temporarily suspend construction. Since a sudden suspension of any coastal land reclamation
project is unsafe and ill‐advised prior to protecting what has been constructed, the Project
Company made a written request to the GOSL to carry out protection in connection with the
partially constructed breakwater to ensure that works completed will not be destroyed due to
natural causes during the period of suspension, damage is not caused to the Fibre Optic Cable
laid by Sri Lanka Telecom in proximity to the breakwater by loose rock and material is not
washed away due to monsoon activity and transported to the surrounding areas – especially the
Galle Face beach promenade and the Baire Lake outlet. The Project Company received the
required permission to undertake protective works via a decision of the Cabinet of Ministers and
has been carrying out such works throughout the suspension period.

The Project Company has hired world‐renowned international consultants working together
with local specialists to advise on various aspects connected to the development. International
consultants include: Atkins of UK for Master plan review; Aecom of USA for utility design, road
design and landscaping; Sweco of Sweden for overall master planning; Jones Lang LaSalle (JLL)
and CB Richard Ellis (CBRE) of UK for financial and marketing pre‐feasibility and CDR
International of The Netherlands for technical review of designs of the EPC contractor. A highly
competent team of technical consultants assisted the Lead Consultant to this SEIA study, CECB,
in preparing this SEIA report. They included LHI Coast & Water, CDR, University of Moratuwa,
GSMB Technical Services and NARA.
This SEIA report draws the conclusion that due to the construction of the Colombo South
Harbour, the incremental environmental impacts from the construction of Colombo Port City is
minimal/negligible at the reclamation site and the coastal zone to the North and South of the
site. The Project will also in not contribute to coastal erosion. For erosion to occur the proposed
project must create an obstruction to the longshore drift or must transfer sediment from the
dynamic coastal zone to deep waters. Neither of these occurs with the Port City Project as
demonstrated in numerous modelling studies carried out as described above for both the
Colombo South Port EIA, the Port City EIA of 2011 and this SEIA


During construction and post construction period of the South Port there was no overall
negative impact on the coastline or on the natural ecosystems. Throughout the construction
process including dredging and reclamation, a wide range of parameters including “continuous”
water quality measurements were made. On more than 95% of the occasions (continuous
measurements over 4 years) the total suspended sediment levels at the reference point at
Kelani River mouth was greater than at the project site (3 locations), indicating the natural
turbidity from turbulent river flow was more significant than that of dredging. Contrary to
popular belief dredging did not cause serious impacts and natural ecosystems such as reef
systems will continue to be affected by sediment laden river turbulence.

Port City breakwater will have a crest level of +4.0 m above mean sea level (low crest
breakwater allowing overtopping) in comparison to the crest level of +10.3 m of the Colombo
South Port Project, leading to a significantly less quarry material requirement for Colombo Port
City. Colombo South Harbour used around 2 mn m3 or 57% more than the total requirement of
3.5 mn in quarry material required for Port City. The quarry material already at site is around
700,000 m3 and hence the additional amount required to complete Port City is 2.83 mn m3.

The Port City Project covered under this SEIA comprises of the following elements of work: (a)
sand dredging and transport (b) filling for reclamation and ground treatment to reclamation, (c)
construction breakwater and other related structures (edge revetments/seawalls, artificial
beaches, groyne at Beria outfall, inner breakwater, marina basin, and lagoon and canal. The
protection of the environment has been achieved by measures starting from the review of the
location of the selected site, to a detailed study of appropriate engineering design solutions, and
to the deployment of environmentally friendly methods of construction.
The scale of reclamation for 269ha of land area is considered optimal for the following reasons:

(a) The economic justification for the scale of the project has been described earlier in this
SEIA report. This includes some theory and practical reasons explaining the case for the
Colombo Central Business District (CBD) being expanded to encourage waterfront living
and working within a systematically master planned area with the aim of positioning
Colombo as the most liveable city in South Asia. When developed, Colombo Port City is
expected to evolve as a regional financial centre, shopping and entertainment district
and a tourist attraction that will potentially double average stay in Colombo by a typical
tourist and attract at least 500,000 new tourists to Colombo. Colombo Port City is
therefore expected to smoothen out the cyclical nature of tourist arrivals to Sri Lanka
thereby having far reaching economic benefits to the regions as well.
(b) The footprint of the reclamation for 269ha is within the shadow created by the
breakwater of the Colombo South Port while being able to maximize the development
potential of the strategic site. The overall concept master plan for Colombo Port City
corresponds to plans prepared by CESMA International Pte Ltd of Singapore in 2004
under the Western Region Megapolis Regional Structure Plan in terms of location, scale
and amount of land to be released annually for development, based on a 25 year time
horizon for development of Port City.
(c) Due to the long term nature of the project where land will be released gradually on a
phased basis at market prices jointly agreed with the UDA/GOSL (this is stated in the
Project Agreement) and the fact that Colombo Port City is expected to attract new
demand, the creation of new land through this development is not expected to have an
adverse impact on property prices at an aggregate level. In fact, with Port City expected
to attract new residents to Sri Lanka such as entrepreneurs, fund managers, retirees

and the Diaspora, at the aggregate level, property prices are expected to increase over
time.
(d) The offshore breakwater is necessary to protect the reclaimed land. The scale and
therefore construction cost of such a breakwater will not be reduced even if the area of
reclamation is reduced. As such, the financial investment in the project may not be
justifiable should the scale of reclamation be reduced, particularly in considering the
large area of 96 ha (or 36%) of the reclaimed area allocated as common areas for use by
the public as roads, parks etc. This does not include around 20ha of artificial public
beaches of 30‐80m in depth being created, which increases the public spaces to over
40%. Furthermore, 23% of the reclaimed area is allocated to the Government as
marketable land, leaving the Project Company with 41% of the land reclaimed for its
own financial returns.
(e) From the submission of the initial proposal by the investor in April 2011, though the
reclamation area proposed has increased from 200ha to 269 ha for reasons mentioned
above, the area allocated to the Project Company has actually decreased to 110 ha as
shown in the chart below. This is a consequence of the extensive negotiations over 2 ½
years by GOLS’ SCARC and the TEC. It will be noted from the chart below that 92% of
the 36 ha increase from 233 to 269 ha is on account of increase in public spaces.

Land distribution Project Company Project Company Negotiated Position SEIA of 2015
Proposal* Proposal
Apr 2011 Oct 2012 Sept 2014**
Land (ha) % Land (ha) % Land (ha) % Land (ha) %
Land allocated to
project company 120 60% 120 52% 108 46% 110 41%
Land to
SLPA/UDA/Government 50 21% 62 27% 63 23%
Public areas (excluding
beach) 80 40% 63 27% 63 27% 96 36%
TOTAL RECLAIMED
AREA 200 100% 233 100% 233 100% 269 100%
_________________
Notes:
* Joint venture option proposed, though the Government would have to fund its portion of the equity in cash from
State resources.
** The Project Agreement stipulates a reclaimed area of no less than 233 ha and marketable area of no less than
170 ha. Formula for land allocation between the GOSL and Project Company in case marketable land exceeds 170
ha and applied in allocation given in this SEIA

The above mentioned aspects provide the basis for expanding the reclaimed area from what
was proposed in the approved EIA (2011) and Addendum to the EIA (2013), though within the
geometric framework of the original conceptual designs. That is, given the above constraints of
geometric similarity and the specified physical boundaries of the Colombo South breakwater, a
suitable size for the project may be selected, subject to confirmation from design studies
supported by comprehensive modelling. As elaborated elsewhere, such modelling has been
carried out for the expanded area, including for the Beira Lake outfall. Therefore, there are
strong justifications for the expansion and modification to the original design for Colombo Port
City.
This SEIA also evaluated the cost‐benefit of this project and concluded that significant economic
benefits can be generated from the project, particularly during the second phase of benefits

from the construction of the built environment of Port City. Through the analysis presented the
following conclusions were also reached:
 The extraction of rock material required to complete the Port City Project constitutes
44% of the reserves of 11 quarries surveyed for this SEIA and that the 11 quarries
constituted only 9% of the number of quarries in Colombo and Gampaha districts.
Moreover, may quarries are idle today and the 2.83 mn m3 of quarry material required
would not have an impact on supply or price impact to the construction industry at
large.
 With the mitigatory measure of making available the SLLRDC borrow site for sand
dredging, the 65 mn m3 of sand required to complete Port City consumes only 17% of
the dredge‐able/available sand volume available in the borrow areas as designated by
GSMB. This, combined with the fact that the area to be dredged will only be 15‐25% of
the dredge‐able area of 200 km2, avoiding environmentally sensitive fishing grounds
and routes is feasible
 There is negligible ecological impact at the reclamation site. Sand dredging is expected
cause only local and temporary impacts on the biological environment due to the
removal of benthic fauna and increasing turbidity as a result of an increase in
suspended particles in water columns.
 The aspects of aesthetics in relation to the project is adequately covered in relation to
the integration of the old city (particularly the Presidential Secretariat building) and the
new and the creation of around 45 ha of park lands, including a central Park around 4 ½
times the size of Galle Face Green for public use. The positioning of the Presidential
Secretariat building facing the central axis of the concept mater‐plan Port City is in
keeping with the concept proposal prepared by the UDA and presented to SLPA in 2010,
when the project was contemplated as a public investment.
 The marina, the park, the artificial beaches, the lagoon and canal (for swimming, water
sports and relaxation), the attraction of waterfront living are the key aspects that will
underpin the positioning of Port City as an attractive location to “live, work and play”
and the marketing strategy that will attract local and foreign developers to develop the
built environment according to the concept master plan submitted to the UDA for
preliminary planning clearance.
 Accordingly, Colombo Port City will provide facilities and amenities ranging from
commercial spaces, recreational areas, cultural facilities, water sports and park areas
that is not available to the residential and transient population of Colombo City.
 Hydrodynamics in the project area will vary marginally with the development of Port
City. But the increase of current speed is not significant. Also no significant current
increase is observed in the navigation channel area and existing port premises and
therefore no impact on the channel.
 Reasonable velocities exist throughout the year covering different wave & wind
combinations in the area between the reclamation and offshore breakwater and
therefore no stagnation will occur.
 Proposed port city layout provides required calmness level inside the marina and water
area for almost all dominant wave directions.
 No significant morphological changes can be seen in seabed with the new development
at the reclamation site.
 Although there is a tendency of spreading the plume in southern and northern
directions away from the site boundary during the monsoon periods, sediment
concentration is below the value of 4mg/l. Therefore, increase in suspended sediment
level during bottom dumping operations is negligible and therefore no severe impact
occurs due to bottom dumping operations.

 Maximum suspended sediment concentration for rainbow dumping is obtained as
7.73mg/l. Therefore, spreading of suspended sediment plume away from the site
boundary during rainbow dumping process is also negligible. Furthermore, deposition of
the floated material is also observed within the site periphery and hence there is not
impact to the surrounding area due to rainbow dumping
 Since the suspended sediment concentration due to rainbow dumping operations are
within the ambient TSS level, impact to the environment is negligible.
 Continuous water quality measurements over 4 years during construction and post
construction of Colombo South Port revealed that effects due to natural turbidity of
Kelani River was more significant than that of the construction of the new port.
 Therefore the incremental environmental impact from Port City evaluated in this SEIA is
minimal due to the construction of the Colombo South Port.

The approach to the SEIA and engineering process has been one of mitigation through planning
and design, whereby some of the potential environmental impacts have been reduced as far as
practicable through an iterative planning and design process. This has decreased the overall
impacts materially.

The SEIA study has been supported by engineering design investigations, which included a
plethora of field studies as well as mathematical and physical modelling and simulation studies
described in various chapters of this report and summarized in the Executive Summary. In
addition, detailed environmental studies relating to marine ecology and fisheries, underwater
and built cultural heritage, socio economics, extended cost benefit analysis, noise and
vibrations were carried out to obtain information on the existing environment. Thereafter,
impacts arising from the Phase 1 of the Port City project covered under this SEIA were duly
assessed taking into account the effects of the proposed development within the identified
location.

As mentioned at the outset of this study, as stipulated in the Project Agreement entered into
between the GOSL and the Project Company, the EIA process for Port City Project has 2 phases.
This SEIA is a continuation of the Phase 1 environmental assessment of the reclamation,
material extraction for reclamation and protective and related works. The Phase 2 EIA for the
construction of the buildings and infrastructure of the Port City, including traffic impact
assessment, will commence very shortly. The phase 2 EIA study will be based on the concept
master plan and infrastructure requirements submitted to the UDA (and described in this SEIA).

The Monitoring Plans have been divided into those for Impact Confirmation Monitoring and
Compliance Monitoring. Note that the Colombo Port City Project as constructed over a 6 month
period ending March 2015 and the Monitoring Plan presented herein has been refined based on
extensive monitoring data obtained during construction. The recommended functions of the
Environmental Monitoring Committee (EMC) take cognizance of the importance of stakeholder
participation in both Impact Confirmation and Compliance Monitoring. It is intended that the
Project Company and the GOSL/Ministry of Megapolis & Western Development/UDA will enter
into an understanding on mitigation measures and resource requirements for implementing
such measures including the contents of the EMP.

In conclusion, it should be emphasized that from the initial stages where the Port City project
was contemplated as a GOSL/SLPA funded public investment project and later as a private
investment via CCCC, during the period leading to the signing the Project Agreement and in
terms of the Agreement itself, the responsibility for carrying out the required environmental
studies and obtaining the required permits and consents in relation to all environmental studies

including this SEIA has been the responsibility of the GOSL/SLPA, and, in terms of Clause 3 of
the GOSL Agreement and the Project Agreement annexed thereto, all rights, obligations and
liabilities of the SLPA are deemed as rights, obligations and liabilities of the GOSL. During the
course of this year, the GOSL has decided that the Ministry of Megapolis & Western
Development should be assigned the responsibility of securing required environmental
consents, pending necessary legal and legislative lacuna impacting the UDA from stepping into
the role of the SLPA being addressed with the assistance and recommendation of the Hon.
Attorney General.
In light of the above, the EIA team has highlighted below several concerns and
recommendations that would need careful consideration and execution:
1. Securing the cooperation and buy‐in of the impacted fishing communities: Currently,
considerable publicity has been given regarding the concerns of fishermen on the
impact of sand extraction from the designated borrow areas on fisheries. As such, it is
vitally important that the fisher community is educated on the aspects of the project,
the implementation plan, safety and mitigation measures taken and specifics of the
income support and benefits program for which funds are to be allocated to the
Ministry of Megapolis as recommended in this SEIA study. It is therefore recommended
that the relevant Government agencies carefully program the implementation of the
benefits program in consultation with the community stakeholders.

2. Mitigation measures for sand borrowing: The Colombo Port City Project would require
65mn m3 of sand to be extracted over a period of up to 36 months from the 2 borrow
areas assigned by GSMB for the purpose of this project. The length of the dredging
period is also dictated by the speed of construction of the breakwater, which has to be
slowed down during monsoon periods. Of the borrow areas, Site 1, nearer to the
shoreline, is a fishing area comprising spawning grounds. For this reason, the SEIA
stipulates that only up to 30% of the total sand requirement of 65 mn m3 should be
obtained from this site. This EIA recommends that the suggested mitigation measure of
obtaining sand from the borrow area assigned to SLLRDC be pursued. Assuming that the
availability of the required quantity of sand is confirmed via exploration studies at the
SLLRDC borrow area, this site be used to dredge sand in preference to Site 1 that is
nearer to the shoreline.

3. Shore Profile Survey: Near‐shore profile survey is proposed at 500m‐line spacing from
MHWL to 16m water depth of the coastal stretch from 10km to 35km north up to
Negombo lagoon mouth and from 10km to 15km south up to Mount Lavinia headland.
The survey data will be used to monitor the shore profiles after the construction of port
city. Therefore, it is recommended to commence beach monitoring as soon as
reclamation works commences to assess whether there will be a significant change
occurring (even though it is very unlikely for reasons mentioned in this report) due to
the construction activities relating to reclamation and breakwater construction. It is
noted that beach profiles taken in the above manner as part of the EMP at prescribed
intervals prior to suspension of the project shows no changes to the near‐shore profile.
commencement (this has been done) and thereafter monitoring be carried out at
prescribed time intervals.


The SEIA study has considered the following key elements
(a) The existing environment
(b) The significance and the contribution of the project towards national development and
the potential evolution of Colombo a financial, commercial and tourism hub
(c) The potential environmental impacts including their magnitude and significance caused
by the proposed development
(d) The ability to eliminate and/or minimize the identified negative impacts effectively
through both the “mitigation by design” process and the identified mitigatory measures
On the basis of the detailed analyses of the above aspects presented in this study and on the
assumption that the recommendations for the mitigation of identified impacts are adopted and
adequately implemented, it is concluded that there is no insurmountable environmental
impacts associated with the construction of the reclamation and related protective works and
the extraction of required material for the said construction – sea sand and quarry material.


Port City Project ECBA

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Port City Project ECBA

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EXECUTIVE

The Ministry of Fisheries and Aquatic Resources Development together with the Department of

The Coast Conservation Act No. 57 of 1981

The EIA process is part of the permit Coastal Zones of Sri Lanka

1. Aquaculture Resources 6.8

2. Archeological and Cultural Aspects (rounded off) 0.0

3. Possible accident costs 3.8

4. Mitigation costs 0.4

5. Monitoring costs 1.7

Description NPV at 6.5% NPV at 8.0% NPV at 10.0%

Fin. Fi+Ec Fi+Ec+Env Fin. Fi+Ec Fi+Ec+Env

1. Base case 350 387 377 91 128 117 -153 -118 -128

2. Reduction 234 272 261 -5 32 22 -228 -193 -203

4. Cross 37 75 64 -187 -150 -160 -394 -358 -368

Description NPV at 6.5% NPV at 8.0% NPV at 10.0%

Fin. Fi+Ec Fi+Ec+Env Fin. Fi+Ec Fi+Ec+Env

1. Base case 350 2,358 2,347 91 1,660 1,650 -153 986 976

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