Lotus Tower set for entertainment, high-powered digital transmission

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Ceylon Today confirms that a high-powered Digital Terrestrial Television Broadcasting (DTTB) transmission system from the Lotus Tower funded by Japan under the Japan International Cooperation Agency (JICA) worth Japanese Yen 17 billion is in the offing in the backdrop of the China-funded tower that grew, tall amid controversies regarding its funding, transmission network, overall purpose, transparency, and the Chinese contractors’ delay in handing it over to Sri Lanka, among many others.

Transmission

Sri Lanka currently uses an analogue transmission system and the tower will completely transition to a digitised network when operations start in 2023 once the JICA projects on hold due to the current financial crisis takes off and the International Monetary Fund (IMF) bailout is executed.

Floor 1 and 2 of the top seven floors would be used for digital broadcasting TV and radio services respectively.

Sri Lanka approved the adoption of the European standard for DTTB by the Cabinet in 2010 with the goal of switching off analogue broadcasting by 2017. It was then President Rajapaksa on his visit to Japan in April 2013 when he announced the acceptance of the study team and the implementation of a test ISDB-T broadcast in Colombo on the initiative of the Japanese Ministry of Internal Affairs and Communications. JICA which conducted the feasibility study said, through discussions between the study team and concerned parties, it will be possible for the Lotus Tower to be used as Colombo’s transmitting station for the DTTB platform and network operations centre. 

The tower was handed over to the Telecom Regulatory Commission of Sri Lanka (TRCSL) by the Finance Ministry in February 2022. Today, the TRCSL has leased the Tower to Lotus Tower Management Company (Pvt) Ltd, which operates the commercial operations, for a 50-year lease agreement with a two-year grace period; nonetheless, the reasons for disputes surrounding the Lotus Tower is a part of  aggressive geopolitical tension in the region. In fact, as it’s the tallest tower in South Asia, the transmission can be a threat to India and digitised transmission of local TV and radio stations could reach other countries. The tower’s control room will have to be managed to make sure transmissions do not cross borders.

There was no access to the tower until it was opened to the public on Thursday (15). The Government inaugurated its construction in 2019, with a particular focus on improving the country’s technological hub and telecommunication industry. However, there are many unanswered questions about the tower, which was built with a USD 104 million loan from China’s Exim Bank. The Chinese bank loaned USD 88.65 million and the rest has been borne by the Sri Lankan Government. The loan instalments are due to be completed in 2023 and already USD 66.39 million has been settled according to the Government.

The telecommunication transmission using the Lotus Tower is still untouched and the Government is gearing for a mega soft loan from JICA to handle the digital transmission and digitise all local TV and radio channels including the national security transmission.

Currently the Lotus Tower only operates base transmissions for the site area and for some private TV channels, but will have the Digital Video Broadcasting Network operation once the JICA loan is passed.

But according to TRCSL sources, they are working closely with the Police Department to cater to their needs and this is being discussed.

When transmission is digitised in one frequency, nearly six transmissions can be operational from which 25 TV channels could be broadcast.

A high-powered telecom transmission remains controversial

According to the TRCSL, whose Chairman is Defence Ministry Secretary Major General (Rtd.) Kamal Gunaratne, the tower will also permit the transmission of signals from 50 TV channels and over 35 FM radio stations, in addition to entertainment. Former President Gotabaya Rajapaksa wanted the TRCSL, which reports to the Defence Ministry, to spread 5G technology across the island based on his manifesto ‘Smart Sri Lanka.’ This would be implemented with JICA funds.

According to TRCSL, the tower will also house 20 service providers in telecommunication and relaying of defence signals, as well as indirectly contribute to the riddance and removal of high-power TV and FM antennae innumerably positioned at various structures in Colombo city.

The Colombo Lotus Tower integrating telecommunication project and the fibre optic projects in Sri Lanka are just two of the numerous multi-million dollar projects signed by the Government, but the tower’s functions as a communication tower have been kept under wraps.

In Sri Lanka, major telecom operators such as Mobitel, Dialog Axiata, Etisalat, and Airtel sell devices related to mobile broadband internet access made by two Chinese companies, ZTE (ZTE Corporation is a Chinese partially State-owned technology company that specialises in telecommunication) and Huawei, which US legislators have questioned, claiming that Huawei and ZTE act as front companies for the Chinese Government and pose a serious cyber security threat.

To add to this assertion, when the tower was opened in 2019, then-President Maithripala Sirisena suspected massive corruption. His remarks were on the suspected disappearance of the Aerospace Long-March International Trade Co (ALIT), which misappropriated roughly Rs 2 billion in funds placed by the TRCSL. He claimed that the suspected misappropriation occurred in 2012.

He said the Chinese Government nominated its National Electronics Corporation and ALIT, and that the active party in the contract was always the China National Electronics Corporation, not ALIT. This information was announced on national television and other media by a responsible President of the country, but it was not investigated and was rejected without a trace.

US on the controversial CEIEC

Another factor revealed was the Lotus Tower’s contractor, China National Electronic Import and Export Corporation (CNEIEC/ CEIEC). The US State Department’s Office of Foreign Assets Control (OFAC) designated CEIEC for its support of the illegitimate Maduro regime’s efforts to undermine democracy in Venezuela, including efforts to restrict internet access and conduct digital surveillance and cyber operations against political opponents.

The US stated that Chinese technology firms, particularly CEIEC, continue to undermine democratic principles of freedom and transparency by inventing and exporting tools to monitor, censor and spy on citizens’ internet activities. According to the US Government, CEIEC provides cyber support and technical professionals to the Venezuelan National Telephone Company (CANTV), which controls 70 per cent of internet service in Venezuela.

“The software and hardware suite delivered by CEIEC to Venezuela is a commercialised version of China’s ‘Great Firewall’. The Great Firewall is China’s state-wide web block and filter system, which is used to maintain stringent online censorship, regulate the information Chinese individuals can access outside of China, and prevent internal spread of content considered undesirable by the authorities.” the OFAC said in an official statement in November 2020. However, the local media stated that the TRCSL had “suspended a payment equal to USD 15 million to CNEIEC” with no further details but that delayed in completing the construction of the tower. Did CINEIC accept that suspension of payment and how the matter was rectified is still not known.

It was the Chinese conglomerate comprising CEIEC and ALIT that completed the project on a Turnkey Basis (scheme of supply in which supplier shall be responsible for design, manufacture, supply, site preparation and services, installation and commissioning of equipment, tests and trials, training, maintenance and handing over to the purchaser for operation), using the concept and preliminary design drawn by local architects. The signing of the construction contract between TRCSL and the Chinese conglomerate was held on 3 January 2012 at the TRCSL with 13 Chinese high ranking officials including   Guo Zhaoping (President, ALIT),   Chen Xu (President, CEIEC), and  Lin Changhai (Chief Designer) in attendance. At that time Lalith Weeratunga was the Chairman of TRCSL and Secretary to the then President Mahinda Rajapaksa who attended the  signing ceremony.

Fake tickets

The opening of the tower itself sparked a stir last week, when bogus tickets with details in English, Sinhala and Chinese started circulating on social media. It said the tickets are free for Members of Parliament and Chinese nationals. The Chinese Embassy was the first to call the ticket a forgery, followed by the Lotus Tower Management Company (Pvt) Ltd. The Embassy said even though it was hoax, it garnered publicity for tower’s opening.

“Lotus Tower Management is leased to us for 50 years by the TRCSL”

Ceylon Today spoke to Director and Chief Executive Officer of the Lotus Tower Management Company (Pvt) Ltd Major General Prasad Samarasinghe. 

Can you brief about the Lotus Tower Management Company (Pvt)? What’s your mandate?

The lotus tower is owned by the TRCSL and they are a State run entity and cannot run the operation hence, through a cabinet approval the Government initiated a private company under the Treasury.  Our revenue and auditing would be carried by the Treasury and we are following all the tender procedures with the Government’s assistance.

Does TRCSL have a share?

No, they don’t but they have leased the tower to us for 50 years. As a sinking partner we will have to pay a rent to the TRCSL after two year grace period. This is to be under the TRCSL and take funds when wanted for expansion etc.  The TRCSL is the owner of this Tower.

What is the share the Finance Ministry has?

The Treasury gets a one per cent stake from our company and we hold 99 per cent of the shares.

How many in the director board

The Chairman and seven including myself.

Does any Chinese company hold shares?

No, not at all. Under the mandate the defect liability period is one year and the Chinese contractor will run the maintenance training of local engineers etc., and repair and handing over equipment until February next year. We have guarantee period for various other contractors.  With regard to the elevators, Japan’s Fuji Tech is involved. They will have to maintain the elevators until 2024.  Then we will have a service contract with them. Likewise we have contractors for generators, chillers, etc,.

How many stalls do you have?

We have nine floors on top and three floors in the bottom of the tower.  The Ground floor is mainly for restaurants, two exclusive shops like jewellery and branded items are also booked. The first floor would have IT-based gaming and innovative centres, a digital art gallery, museum and an e-sports arena.

Are there investors?

Seventy per cent of investors have showed up for business already.  We have called for Expression of Interests (EoIs) and for proposals that would be completed by 8 October.  For certain areas there are two clients and we are negotiating with them too.

What about international investors?

Yes. There are international bidders for the restaurant at the top tower house.  We have the revolving restaurant and two other two banquet halls. The bidders are from India and China. We have not yet opened the bids. There are five bids coming and we will open the bids in three weeks.

Are there any other entertainments coming up?

Yes. We will have bungee jumping and just about to sign the agreement with a Japanese company. We will start this in December this year.  We have had base jumping. We are hoping to have two more base jumps from the Tower. Two from Türkiye will join this sport.

When will the total loan and interest to the Chinese when would be settled?

By 2024.

What is your target investment once all of it is operation?

By end of 2024 we are hoping to earn about Rs 500 million. The company is small with only 28 staff and we would be outsourcing most of the activities.  We have received Rs 500 million from the Treasury to make changes in the tower.

Are you supposed to return this fund given by the TRCSL?

We have to spend this and we will have to give the profit we earn to TRCSL.

How will having a digital transmission tower going to affect security?

Personal security and the building’s security are two different aspects to work with.  Government will provide security to the restricted areas and we will also hire a private security service.

Is there insurance cover for the visitors climbing up the tower?

Yes. We have called for personal insurance coverage for the visitors as well as for the tower.

How do you intend to promote the lotus tower globally?

We will have to see how it goes in the first three months and we have prepared various events for tourists. If you like bungee jumping this is the highest place to do that in the city.  The Japanese company that will be promoting these sports will generate over USD 600 per person and our company would earn 15 per cent. Right now Colombo is dull after 7pm. There is hardly anything for tourists.

The lotus tower was closed despite being officially opened in 2019. Have we lost major revenue?

Until February 2022, this tower was with the Chinese contractor. They just opened before the presidential election that’s all.  When I was appointed by the TRCSL to inspect the place to run the operations, we found 21 major defects in the tower.  The elevators, generators etc., were all under repair.  There were leaks in certain places.  We did not take over from the Chinese until these were repaired. It was on 20 February when we took over from the investor. They had to repair everything.

There was a delay. By 2015 this tower should have been completed.  The loan balance was not given to us. They also extended the time. It was initially a USD 104 million loan and it went up to USD 113 million due to the delay.  Due to the inflation, there were variations and the loan has shot up to USD 113 million. Also TRCSL did not pay USD 10 million because they delayed. Now our target is to earn and not take a single penny from the Treasury to run this business in the future. We have taken this tower on a 50 year lease so that we can call for businesses and investors. Certain investments would be 15 to 20 year lease agreements.  The revolving restaurant would be a major investment. There are three foreign bids and two international bids for the rotating restaurant. Still the bids are open, even for the two banquet halls, the six suites and a well equipped kitchen.

What do you expect the country to do to earn revenue?

We need a peaceful country so that tourists would come to enjoy the activities we have lined up.

Any expansion projects related to the Tower?

We have acquired 4.5 acres around the tower that would be 10.4 acres in total. That new land would be a Lotus Park a multi-storey car park.

By Sulochana Ramiah Mohan