At last week’s weekly ministerial meeting, Megapolis and Western Province Development Minister Patali Champika Ranawaka dropped a bombshell that triggered a lengthy discussion. It came after Highways Minister Lakshman Kiriella sought approval “to pay the cost of environmental and social due diligence to be carried out by the lending agency from the local funds allocated” for the construction of the “Pothuhera to Galagedera” section under the Central Expressway Project. The distance involved in this project is a mere 32.5 kilometres.
Minister Ranawaka said that the previous Mahinda Rajapaksa government was criticised for spending colossal amounts of money on road projects. Then it was over the construction of 175 kilometres of highways. This criticism was on the basis that the costs were high and fears that there would be no funds left for other development activities. And now, from 2015 to 2017, an extent of 189 kilometres of highway is being built. The project in question is being implemented without due consideration for the National Physical Plan which expressly sought to discourage urbanisation of hill areas to prevent natural disasters. He complained that there were 50 to 100 percent deviation in costs for Japanese projects. The RDA had extended Rs 123 million (20 percent of the cost). It could end up between Rs 200 billion to Rs 250 billion, he warned. Pointing out that “we are under IMF medication,” he said a four lane highway from Kurunegala to Galagedera would have been less expensive. He questioned the basis on which the selections were made.
Sports Minister Dayasiri Jayasekera joined in the tirade with other colleagues including Susil Premjayantha and Mahinda Amaraweera. An incensed Kiriella shoulted back: “Oyagollo okkama parajithayo.” (You all are losers). President Sirisena who intervened said that any decision they would take had to bear in mind the good relations Sri Lanka had with Japan. He said the matter would be discussed at another ministerial meeting, putting off the confrontation for another day.
In his memorandum dated September 28, Minister Kiriella said, “The Civil Works for the construction of Section 3 of the Central Expressway from Potuhera to Galagedera (32.50 km) are to be financed through a credit facility amounting to JPY 100 billion from the Bank of Tokyo – Mitsubishi UFJ Ltd. (BTMU) – Nippon Export and Investment Insurance (NEXT). The discussions with BTMU – NEXT are in progress. The Cabinet of Ministers granted approval for the award of civil works on July 11 2017.”
Kiriella sought ministerial approval “to make a payment of JPY 30 million to Bank of Tokyo – Mitsubishi UFJ Lrts. (BTMU)” and said this was “for carrying out Environmental and Social due diligence and to send them the consent letter immediately.”
On July 11, 2017 the Cabinet of Ministers granted approval for a recommendation by Minister Kiriella to award a tender amounting to more than Rs 147.7 billion to construct the 32.5 kilometre road from Potuhera to Galagedera under the Central Expressway Project.
Giving the background to this deal, Minister Kiriella said in a memorandum dated July 6, 2017: “The government of Japan has given its consent for providing the financing the construction of Section 3 of the Central Expressway Project (Potuhera to Galagedera) through the Bank of Tokyo – Mitsubishi (BTMU) of Japan. Accordingly, the government of Japan through the Embassy of Japan has originally nominated the under mentioned 03 companies to participate in the process for inviting bids for the implementation of construction. The Cabinet of Ministers has granted approval dated August 15 2016.
1. Taisei Corporation (2) Penta Ocean Construction Co. Ltd. (3) Wakachiku Construction Co. Ltd. “However, process for inviting bids had to be annulled in the initial round due to the reasons that Taisei Corporation did not submit the bid security and other two companies did not participate in the bidding process.
“In view of the above, in order to increase the competition resulting in the government of Sri Lanka to secure better negotiated terms, the Government of Japan introduced a fourth bidder M/s Fujita Corporation, to the ongoing tender process.”
Minister Kiriella sought approval to award the contract to the Tasei Corporation for the Pothuhera–Galagedera section at a contract sum of Rs 134,905,155,000 (or over Rs 134 billion). On an average, this cost worked out to more than Rs 3.88 billion per kilometre. Kiriella added “Considering the recommendations of the government of Japan and the Cabinet Committee on Economic Management, to provide an opportunity for M/S Taisei Corporation and M/s Fujita Corporation to form a Consortium on agreeable terms to both parties and to operate depending on the necessities during the implementation of this project.”
The minutes of the Cabinet of ministers meeting dated July 11, 2017 noted “…along with further clarifications made by the Minister of Highways and the views expressed by the Hon. Prime Minister and the concurrence given by the Minister of Finance and Mass Media for the proposals in the Memorandum, it was decided to Grant approval to the recommendations.
That, the Consortium proposed to be established should be on terms and conditions agreeable to both M/s Taisei Corporation and M/s Fujita Corporation of Japan and the Government of Sri Lanka.
Interesting enough, the enormity of funds utilised for projects has generated a controversy within the Government itself. This is at a time when there have been no checks and balances.
In this backdrop, the coming weeks ahead of the local council elections are no doubt a challenge for the two main contestants – the SLFP and the UNP. Who will come first among them, no doubt, would be an indicator of the public support they now enjoy. As for the Opposition parties, a win that will place them above the two main contenders would be a huge bonus in their efforts to weaken the Government, they wish to replace.
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