Press briefing of Cabinet Decision taken on 2017-06-27

Adoption of the Lease-Back OPEX Module in the construction of the Government Sponsored Buildings

- With the development of the country's economic activity, the need for the accommodation facilities of the state sector has also increased gradually. A sum of Rs.21.4 billion in 2016 and a sum of Rs.16.3 billion in 2017 have been incurred for the construction of state buildings and as a result, the possibility of utilizing funds for priority development programmes has been limited. Under the proposed Lease-Back OPEX Module to be adopted as a solution to the problem, to give over the state owned land to private parties on lease basis for construction of state buildings as per Government specifications, subsequent to the construction, the Government in turn to pay a lease rental to the private parties concerned for the use of the building space for an agreed time period. Since the lease rent payable by the Government for the building could be set off against the rental to be paid by the private parties it would be beneficial to the Government, and also it would create only a minute affect on the Cash Flow of the Government. Accordingly, the proposal made by Hon. Ranil Wickremasinghe, the Prime Minister in his capacity as the Minister of National Policies and Economic Affairs, to adopt the 'Lease-Back Real Estate Development Model' as the provision of a cash flow funding method through the Public Private Partnership mechanism, was approved by the Cabinet.