• Presidential grant of 2,056.73 acres in 2012
• Challenges in securing investors for Baththalangunduwa and Uchchumunai
• Deviations from tourism master plan recommendations

Twelve islands in Kalpitiya, entrusted to the Sri Lanka Tourism Development Authority (SLTDA) as free grants, remain dormant in terms of tourism development even after more than a decade, a recent audit report by the National Audit Office (NAO) reveals.  

The total land area transferred by then President Mahinda Rajapaksa amounted to approximately 2,056.73 acres, designated as free grants under Section 2 of the Land Development Ordinance No.8 of 1947.

According to the report, the SLTDA had proceeded to lease out portions of these lands to various companies. 

Specifically, one island in Kalpitiya had been leased to a company in 2010, three had been leased to another company in 2011, and an additional island had been leased to a different company in 2020. 

Furthermore, five islands had been leased to five separate companies, one of which overlapped with a company mentioned previously.

However, the audit raised concerns regarding the selection process of two companies that had been leased lands in 2010 and 2011, as the method of selection for these companies lacked clarity.

It is further revealed that a master plan had been prepared without specifying a precise time period for the development of Kalpitiya town and projects relating to two islands (Palliyawatta and Muthuwal), totalling 1,915.96 acres, which had neither been acquired nor assigned to the authority. 

Additionally, a master plan had been developed for eight islands in Kalpitiya, covering 1,845.48 acres, which had been assigned to the authority as free grants.

As per the report findings, despite the transfer of lands to investors, the SLTDA had failed to provide essential infrastructure facilities outlined in the Kalpitiya master plan. 

These facilities include jetties and decks for tourists, water supply schemes, water storage facilities, centralised electrical power plants, water treatment plants, waste and solid garbage refinery machines, power generation plants (including solar and wind power plants), waterfront development, public area lighting, desalination plants, power transmission stations, information centres, and walkways.

Furthermore, progress reports related to the action plan for the years 2020, 2021, and 2022 had revealed that funds of Rs. 3 million, Rs. 9.6 million, and Rs. 5 million, respectively, had been allocated within the Kalpitiya Island Resort project. 

The aim had been to develop a resort with unique features and increase the number of hotel rooms. However, as of 30 November 2022 – the audit date – these funds had not been utilised to fulfil the development objectives.

As of the audited date of 30 September 2023, no development activities had commenced due to various issues. These issues included challenges related to occupants, obtaining approvals, non-submission of required documents by promoters to the Investor Relations Unit, and insufficient intervention by the SLTDA.

Additionally, it has been revealed that master plans had been prepared by the authority for the development of Kalpitiya town. 

These plans had aimed to empower the local community, promote ethnic and religious harmony, implement strategic management plans, improve waste management and garbage treatment, enhance drainage systems, and develop infrastructure facilities. 

Furthermore, the plans had aimed to foster the development of cottage industries, fishing industries, salt production industries, and health services in coordination with State institutions such as the Urban Development Authority, Fisheries Ministry, and Department of Coast Conservation and Coastal Resource Management. 

However, despite the preparation of these plans, the related programmes had not been implemented.

During the same period, a total of 457.44 acres from six islands in Kalpitiya, which had been granted to the SLTDA as free grants by the President in 2010, had experienced significant delays (spanning years 2009-’11) in being directed towards investment activities.

In a directive outlined in letter No. MTCA/PLD/ 03/01/92 dated 18 January 2022, the Secretary to the Tourism Ministry had approved the necessity of obtaining a performance guarantee at the time of signing lease agreements with selected investors, both local and foreign, for the development of tourism projects on lands owned by the authority. 

However, these clauses had not been included in the agreement between the authority and Nucleus International Ltd. dated 20 April 2022, concerning Sinna Arichchalai Island. Furthermore, in the agreement finalised on 7 March 2022 between Samagi Hotel and Travels Ltd., a performance guarantee of Rs. 1 million had also not been obtained.

When asked about the decade-long delay in commencing the projects, SLTDA Chairman Priantha Fernando explained to The Sunday Morning that after the completion of the Kalpitiya master plan, the lands had been vested with the SLTDA. 

With the exception of two islands, Baththalangunduwa and Uchchumunai, investors had been secured for most of the other islands as far back as 2012. However, various reasons have caused delays. 

For instance, in the case of one island, there has been a request for permission to construct water bungalows, which is still pending with relevant agencies. Although lease agreements have been signed and executed, developers are awaiting alignment with agencies and clearances to proceed.

Fernando acknowledged the prolonged delay, stating that it had been over a decade. He noted that they had consistently referred the matter to the authorities and that it was now in the final stages. He expressed confidence that they would be able to push forward and obtain the necessary clearances soon.

The SLTDA Chairman highlighted the dynamic nature of these islands, noting that their shapes continuously changed and that they may not withstand heavy loads. Despite the developer proceeding with plans, execution has been hindered due to changes in shapes and load-bearing factors, necessitating a reevaluation. The developer is requesting an alternative beachfront property in exchange, which has not been secured yet, thus stalling development efforts.

Additionally, Fernando referred to two other investors, one Maldivian and one Indian, whose lease agreements had been signed around 2019. However, their projects were impacted by both the Easter Sunday attacks and the Covid outbreak, resulting in significant delays. While the SLTDA had provided extensions, no progress had been made. Ultimately, developments on two lands had been cancelled due to minimal progress.

“This was long before my time; the agreements have been signed. It’s not one agency giving the clearance. The Environmental Impact Assessments (EIAs) have to be developed, which is why the developments are delayed.

“For Baththalangunduwa and Uchchumunai, we were unable to find investors as both these islands cover a total of 1,000 acres and ideally should be developed as one resort. In both these islands, there are local communities. Whatever the agreement, a clause should be included that the residents will be provided a small township within the island as they cannot be shifted since their livelihood depends on the island.

“Certain mistakes were made in the past which we cannot correct now. If you visit the original tourism master plan, the recommendations are for seven islands to be developed based on three studies. But subsequently, the SLTDA has gone ahead and called for proposals for 12 islands. That is one reason why we are having problems. The guidelines have not been followed.”