UAE-based company secures Long Island lease |19 January 2024
An aerial view of Long Island (shown by arrow) among other islands in the Ste Anne marine park
The Seychelles government is currently in negotiations with UAE-based company, Al Sharqia Holding, for the long-overdue development of Long Island.
The company was selected as the preferred of two potential investors, having offered the government USD $23 million.
Vice-President Ahmed Afif explained yesterday that after successful negotiations with Polus, the investor who in December 2005 signed the initial lease to develop the property, Long Island is now the property of the Seychelles government. As such, the government is in the clear to issue Al Sharqia Holding with a long-term lease of 99 years.
In a bid to avoid delays, the investor will be subject to strict lease conditions. They have nine months from lease signing to submit the construction plans to the Seychelles Planning Authority (SPA). Construction of the tourism development, which will comprise rooms and villas, are to be completed within a two-year period from planning approval.
“We want it to be more rigid this time,” VP Afif stated.
VP Afif expressed that the decision taken by the government will be of great benefit to Seychelles, in generating investment, employment and foreign exchange income, revenues and taxes.
The expression of interest was launched by the Seychelles Investment Board (SIB) in August 2023.
As explained by VP Afif, the government has already received the funds from Al Sharqia Holding, inclusive of the $12 million down-payment demanded by Polus, to transfer the lease back to the government.
Government will benefit from the other $11 million, amounting to just over R150 million, as an upfront payment. After 20 years, the company will be bound to a lease fee of $150,000 monthly.
“We see this as beneficial to us, because we would have been able to conclude this deal and get new investment without having taxpayers’ money, without having to go through arbitration, which is costly and lengthy,” VP Afif stated.
The initial agreement between Polus and the government dates back to December 2005, whereby the investor paid $3.8 million upfront for a 49-year lease. Polus was supposed to complete construction of the project within 30 months.
Due to numerous reasons, despite having started some construction work, the project failed to materialise. By 2010 the government intervened, extending the construction timeframe up until 2012.
With the project stalling once again, Polus and the government signed a new agreement in February 2013. The company was made to pay $1.5 million, with the expectation that the project would get under way, and be completed by November 2014, after which a $100,000 penalty fee would apply monthly.
It remains unclear how much, or whether Polus paid any penalties at all.
The former government opted not to sue the company, instead negotiating with Polus to find another investor.
Upon being elected into office, the Linyon Demokratik Seselwa (LDS) government was approached by Polus claiming that they are still attempting to find another investor to take up the project.
It would have been futile for the government to sue, VP Afif added, since the agreement covers provisions for international arbitration.
Instead, the government offered Polus the option of setting conditions for the transfer. The company requested the $12 million to offset the charge on the property.
Rather than using taxpayers’ money, the government decided that potential investors will be made to pay the down-payment, from the $20 million reserve price.
There were four interested parties at the time, including a Seychellois investor. Of them, one was not able to meet the deadline for submission of an expression of interest, while the Seychellois investor was not in a position to make a financial offer.
The other interested investor made an offer of $18 million.
Laura Pillay