Sri Lanka’s Chinese-built port city stirs white elephant fears

Colombo, Sri Lanka – As far as many residents of Sri Lanka’s capital are concerned, the last thing their island nation needs in the midst of its worst-ever economic crisis is another beach – the island nation’s 1,340km coastline is blessed with some of the most beautiful beaches in the world.

Yet, Port City Colombo (PCC), a vast new Chinese-built reclaimed commercial zone in Colombo, recently unveiled an artificial beach facing the Laccadive Sea.

“The artificial beach is just greenwashing to attract international investors – sustainability is a convenient buzzword,” Priyangi Jayasinghe, a researcher at Colombo’s Munasinghe Institute for Development, told Al Jazeera.

Jayasinghe is one of many local critics who fear that PCC is another Beijing-funded white elephant in the mould of controversial projects. They include the loss-making Hambantota International Port, which was leased to Chinese state-owned China Merchants Port Holdings Company Limited in 2017 as Sri Lanka struggled to repay its foreign creditors, which include China, India and Japan as well as private lenders.

Critics say PCC, which is being developed on 269 hectares (665 acres) of reclaimed land, is unsustainable and will have negligible benefits for the nation’s ailing economy.

“PCC will make a very minor impact on the Sri Lankan economy. It will be a separate tax-free dreamland when the rest of the country is facing higher taxes to deal with the economic crisis,” Jayasinghe said.

CHEC Port City Colombo, which is developing PCC, rejects the criticism and insists the ambitious development project, funded under China’s Belt and Road Initiative (BRI) to the tune of $1.4bn, will establish a world-class city for South Asia.

CHEC Port City Colombo (Pvt) Ltd is a wholly owned subsidiary of China Harbour Engineering Company (CHEC), which in turn is a subsidiary of China Communications Construction Company Limited (CCCC), a majority state-owned enterprise with headquarters in Beijing.

Though scheduled for completion in 2041, construction has finished at parts of the site, including a pedestrian bridge and the artificial beach, which was scheduled to open in December but remains sealed off to visitors.

The project’s credibility received a boost in January from a high-profile visit by the United Kingdom’s former Prime Minister David Cameron. However, many locals, struggling with rampant inflation and food shortages, remain sceptical of more Chinese involvement in Sri Lanka’s economic affairs.

“And that over there is China,” a driver of a tuk-tuk motorised trishaw told Al Jazeera, pointing at the huge construction site for PCC while weaving through the congested midday traffic.

“Every time I return to Colombo, the government has sold a bit more of the nation to China,” Prem Velautham, a Sri Lankan living in the UK who recently visited the site, told Al Jazeera.

In reality, fears of Chinese ownership are based, at least in part, on misconceptions about the facts on the ground.

Much like the Hambantota Port, PCC is not owned by China or a Chinese company but 65 percent of the 178-hectare (440-acre) area of saleable reclaimed land will be held on a 99-year lease by a Chinese majority state-owned company.

“Given Sri Lanka’s role at the epicentre of the ‘debt trap diplomacy’ narrative and the well-documented troubles of the Hambantota seaport, it is not surprising that residents in Colombo or elsewhere are sceptical of flashy projects like this one – they have good reason to be,” Austin Strange, the co-author of Banking on Beijing and an assistant professor of international relations at the University of Hong Kong, told Al Jazeera.

CHEC Port City Colombo has said the project will create 143,375 new jobs and additional economic value of $13.8bn per annum.

“PwC has carried out an economic impact assessment of the Colombo Port City which highlights the significance of this project across multiple economic levers,” a spokesperson for the company said.

Critics question whether those calculations include the full environmental costs.

Vidhura Ralapanawe, a sustainability expert who advised the PCC Commission, the government body tasked with overseeing the development, said the project is car-centric and has not properly taken into account expected increases in demand for energy, water and waste and sewage services.

Ralapanawe also pointed out that a $1.5bn Japanese-funded light rail project that would have served as the main public transport link between PCC and Colombo was cancelled in 2020.

“In 2021, I told the (PCC) commission that the existing sustainability plan was just not good enough – there was no serious focus on sustainability, it was just treated as the icing on the cake,” Ralapanawe, who is executive vice president for sustainability and innovation at the sustainable apparel manufacturer Epic Group, told Al Jazeera.

“What we have now is ‘not much’ in the way of sustainability – this was designed as a city on the cheap.”

A PCC Commission spokesperson rejected these claims as “incorrect” and referred Al Jazeera to the commission’s website, which states: “Port City Colombo follows an integrated approach, for the management of energy, water, and waste, with its sustainability initiatives focused on protecting and preserving the environment.”

When asked by Al Jazeera for more specific details, the commission referred questions to CHEC Port City Colombo, despite the Chinese company stating that the government is to provide the infrastructure for sewage treatment under the Public Private Partnership that covers the development.

The same PPP agreement also makes the government responsible for water supply, energy supply, waste removal and public transport.

Some environmental activists and citizens question whether authorities have the plan or budget for the significant investment required to accommodate PCC, given Colombo’s over-stressed public infrastructure and the abject state of Sri Lanka’s public finances.

CHEC Port City Colombo has estimated the project will increase demand for water by 39,000 cubic metres per day, equivalent to more than 15 Olympic-sized swimming pools, in a country that experienced severe droughts in 1992 and 2001. The developer has said the increased demand will be met by the state water authority and that it is encouraging its private partners to recycle wastewater.

CHEC Port City Colombo has also argued it is “not feasible” to establish a large-scale renewable plant for the project but it is “exploring all avenues to see which specific form of renewable or combination of renewable energy is most feasible”.

The company said a new multi-lane motorway known as the “Outer Circular Highway (OCH)” will meet the development’s transport needs and it will seek to “promote a more pedestrian form of commuting with many sheltered walkways and green canopies”.

While CHEC Port City Colombo has argued that PCC has already generated “significant interest in the international community”, Ralapanawe said foreign firms may be deterred from investing in the project if it does not allow them to meet internal sustainability targets for reducing carbon emissions, waste and water use, and protecting the marine environment.

Many residents in Colombo also express concerns that Chinese investors could take a bigger stake in PCC if the project fails, although there has been no suggestion of such a possibility by either the government or the developer.

“PCC is a case of not thinking things through, on a macro scale,” Ralapanawe said.