Omani firm that sought Colombo prime land now wants solar park

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Omani firm that sought Colombo prime land now wants solar park

The Omani company which recently expressed interest in prime Colombo properties and hotel management deals–and failed to deliver–has also bid for a 100MW solar park at Siyambalanduwa but failed to secure Cabinet approval. 

The Sri Lanka Government received an “investment proposal” from Oman’s Shumookh Investment and Services (SIS) to develop the Siyambalanduwa Solar Park, the Cabinet paper, submitted by Power Minister Gamini Lokuge and dated October 14, said. 

The Omani embassy in Colombo has informed that the SIS is the “investment arm of the public establishment for industrial states [sic] in Oman and it is an Omani Government company as part of Madayn which is a Government authority of Oman,” it claimed. 

The business model proposed by Shumookh for the solar park was build-own-operate and transfer. Envisaged is a 20-year power purchase agreement with the Ceylon Electricity Board (CEB). The estimated project outlay is stated to be US$ 90mn (Rs 18bn) including power transmission and access road infrastructure. 

The proposed tariff–US$ 67 per megawatt hour, pegged to the US$ exchange rate if paid in Sri Lankan rupees –includes investment on transmission infrastructure. The Cabinet paper recommended that SIS be considered for the project as a “foreign sovereign entity and to deviate from competitive tendering process to accommodate their investment proposal…” 

It asked for approval to obtain a technical and financial proposal from SIS and the project committee (already appointed) to evaluate the proposal. It also wanted the go-ahead to direct the Cabinet-appointed negotiating committee to discuss terms and conditions with SIS to ensure power was bought at least cost. 

However, the paper was not approved, Minister Lokuge said. “We withdrew the Cabinet paper. We have invited interested parties to send in their proposals for the Siyambalanduwa solar park. The Shumookh proposal will be included amongst those.” 

Meanwhile, there are questions over how Shumookh’s bid could ever have qualified under the Sri Lanka Electricity Act which says the CEB shall deviate from the competitive tender process only in the case of Government-to-Government projects. Shumookh is a closed joint-stock company established in 2010 by Oman’s Public Establishment for Industrial Estates (Madayn) as its investment arm. Power sector sources said the proposal does not qualify as a direct Government-to-Government project. 

In July 2020, the Asian Development Bank (ADB) published a “development policy” for the Siyambalanduwa solar park which said, “Selecting private investors through a competitive bidding process to build, own and operate the power plant either in one block of 100MW or as a combination of several blocks of smaller capacity is under consideration.” 

Earlier this year, Shumookh expressed interest in two prime Colombo properties — the Chalmers Granary land and the Air Force Headquarters land — and said it was also keen on management deals for the Colombo Hilton and Grand Oriental Hotel (GOH). 

In July, it signed a non-binding memorandum (valid for 30 days) for the two lands and submitted expressions of interest “in letter format”. The Urban Development Authority (UDA) directed the company to follow established procedure — including the submission of a formal proposal — to move forward but it has not done so yet. 

The UDA has advertised many of its lands for leases — 30 to 99 years — to investors and is actively seeking investment. The Chalmers land has been available at least since 2010. The regulator has kicked off the process of acquiring the Air Force land which has to be vested with the UDA before it can be leased to the investor. 

Colombo Hilton and GOH are available on the public-private partnership model through the Treasury-owned Selendiva Investments (Pvt) Ltd. Selendiva was set up to raise capital for the development and revival of three hotel properties: Hilton, Grand Hyatt and GOH. Hilton, however, is tied up on litigation and any progress will be after the case is settled.

 

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