With the forthcoming presidential elections, a large number of speakers pointed to the excessive costs of past public projects, especially road projects. Speakers charge that the escalation of costs is due to the misappropriation of funds by the ruling politicians. Some speakers have claimed on the public stage that in some cases the excessive costs were over 100% of the actual project cost.
A number of public projects that dragged on for decades were accelerated and completed during the current regime, leading to these allegations. These are serious allegations, especially at a time when citizens of the country are about to select the next leader to lead the country into the unknown future. An attempt is made here to analyze the background of some of the recent projects and ascertain reasons for cost escalations.
The common factor in Sri Lanka’s projects is the lengthy period between project proposal and implementation and politicians’ reluctance to implement a project conceived by another political party
Southern Expressway
The expressway from Kottawa to Matara was initially estimated at $348.75m, and the construction of a 59.5 km section between Kurundugahahetekma to Matara commenced on April 2003, to be completed by 2010 as a two-lane road. During the construction, on the recommendation of the Asian Development Bank engineers, the expressway was widened to four lanes.
Finally, when the road was completed in March 2014, the cost had escalated to $741.1m. However, due to the shortage of funds, the road project was restricted to Galle. The construction of the sections from Kottawa to Dodangoda (35km) and Dodangoda to Kurundugahahetekma (31.5km), funded with JBIC and ADB commenced in September 2005 and in March 2006 respectively and was opened to the public in November 2011.
Finally, the funding of the delayed section of Galle to Matara was arranged with the Export and Import Bank of China in 2011 and opened to the public in March 2014. Earlier the highway was expected to be four-lane only up to Dodangoda, with the balance being two lanes. The increased lanes required design changes that delayed the commencement of the Kottawa to Kurundugahahetekma section by over two years. When completed, the costs had escalated from US$ 2.77 million to $5.88 million per km.
The increase in the number of lanes, demolition of ends of constructed culverts and bridges, and the extensions would have permitted the contractor to make additional claims at the expense of the project. The Southern Expressway route traverses through an undulating landscape, moving from one hill to the other, crossing paddy fields, overpassing local service roads, all of which necessitated the highway to be positioned at a higher elevation, making construction expensive. Also, it was claimed that nearly 70% of the originally-planned highway route was altered mostly to satisfy politicians. The inability to foresee the requirement of four lanes at the planning stage was poor foresight on the part of the planners.
Katunayake Expressway
The expressway proposed in 1991 was estimated to cost Rs. 5,544 million. The cost of the completed expressway amounts to over Rs. 45,000 million. In addition, the failed Korean contractor’s work cost the country Rs. 5,444 million, totaling the completed costs in July 2013 to over Rs. 50,444 million.
In 1984, BOI wished to construct a highway from Colombo to the Free Trade Zone with a branch to Katunayake airport and a feasibility study was carried out, but failed to materialize due to misunderstandings between the BOI and the RDA. The proposal was for a highway to the east of the existing Colombo-Negombo road avoiding marshes.
In 1989, President Premadasa accepted the proposal for implementation; however, the implementation was delayed when the court decreed that an Environmental Impact Assessment (EIA) report be prepared and accepted prior to construction. The four-lane dual-carriageway highway, designed for 100 kmph traffic (same as today’s completed road), 30 km in length was estimated to cost Rs. 5,544 million or $ 110 million in 1991.
The route was finalized, designs completed, the EIA accepted and RDA was ready to commence acquisition of property when Premadasa’s demise on May Day 1993 stopped all works. Campaigning for the 1994 presidential elections, Chandrika Kumaratunga promised to abandon the land route that required demolition of houses and shift the road over the Muthurajawela marshes.
Kumaratunga won the elections and the route was moved over the marshes. International tenders were called and the construction was awarded to a Korean company in August 1999 for Rs 9,516 million, shortly before the presidential elections where Chandrika Kumaratunga was re-elected. The Koreans were not the lowest tenderer and the award was marred by allegations of corruption. When Ranil Wickremesinghe was appointed as Prime Minister on December 2001, tight monetary policies delayed payments to the contractor and the contract was terminated on January 2003.
Years later, the Rajapaksa government, wishing to recommence construction, had to settle the contractor first for a payment of Rs. 2,794 million. Other expenses reached Rs. 2,650 million, making the total expenditure to Rs. 5,444 million. The funding of the long-delayed project was arranged with $ 292.4 million on a loan facility extended by China. Accordingly, China Metallurgical Construction Group Corporation was awarded the contract in May 2008, for the construction of 25.6 km long Colombo-Katunayake Expressway for a cost of $ 310 million (Rs. 35,600 million). Finally, when completed the cost had reached Rs. 45,000 or $ 342 million.
Outer Circular Highway (OCH)
The construction of the Colombo Outer Circular Road is being carried out under three phases: Kottawa to Kaduwela 11.0km; Kaduwela to Kadawatha 8.9km and Kadawatha to Kerawalapitiya 9.3km. Construction of the road commenced in October 2009, the road to Kaduwela opened to traffic in March 2014 and is expected for completion in September 2017. The entire route passes over paddy fields and marshes.
The expressway will be Sri Lanka’s most expensive road, estimated at $ 37 million per km. The table shows how the construction costs of roads have soared. In the OCH, the Kottawa to Kaduwela section was mostly over the paddy fields and beyond is marsh.
Norochcholai Power Plant
The need for a coal-fired power plant to supply electricity was accepted since the 1980s, the problem was the location. The most suitable location was identified as Trincomalee, but due to then-prevailing ethnic problems, the Trincomalee site was considered unsafe. While investigating alternate locations, the CEB came across Mawella/Kudawella near Tangalle in the Hambantota District. The site by a natural harbor with the nearby deep-sea, capable of allowing large coal ships of 60,000 dwt was confirmed by Sir Alexander Gibbs & Partners, world-recognized consultants as superior to Trincomalee for a medium-sized coal power plant and an excellent site for a coal power project.
Shortly after the suitability was declared, demonstrations were held at Mawella, claiming people would be expelled to make way for the project. The demonstration was instigated by external parties who misguided the locals. President Premadasa, without investigation in-depth, ordered the CEB to look for another location.
Later, the local Pradeshiya Sabha passed a resolution requesting the power plant be located at Mawella and they would assure the fullest cooperation, but the CEB was not interested. Since the late 1980s, while Norochcholai was under debate, the CEB promoted oil-based generating systems. The sea at Norochcholai being shallow requires coal to be unloaded to barges, which would, in turn, transfer the coal to a conveyor and to the plant. Unloading coal would is not possible during the May-July monsoon season. When Rajapaksa wished to take a decision on Norochcholai, did the CEB present him the complete picture on Norochcholai, Mawella, and the resolution passed by the Weeraketiya Pradeshiya Sabha? If Rajapaksa was made aware of the complete situation, he would have certainly selected Mawella.
Matara-Beliatta Railway
The construction of the 26 km long Matara-Beliatta railway was entrusted to China National Machinery Corporation for $366 million on a loan agreement signed in February 2013 with Exim Bank of China. The costs work out to be $14 million or Rs.18.2 billion per km, the most expensive railway.
Extending the railway line beyond Matara to Hambantota and to Beliatta as the first stage was first proposed by the British. In a 1923 report, the British Engineer who conducted investigations for the railway informed that the proposed line between Dondara and Gandara “traverses by far the most difficult country I have yet seen anywhere so near to the coast in Ceylon”. Although the land for the project was reserved, the project did not materialize.
President Premadasa in 1988 ordered Railway engineers to design and construct the Matara-Beliatta railway for 120 km/hour speed. The route was selected, acquisitions and construction commencing concurrently. With the 120 km/hour requirement, 1923 reservations had to be abandoned. The distance from Matara to Beliatta is 26 km with six stations. The rail-track also involves a tunnel 600m in length. It revealed later that in the mighty hurry under Premadasa, the route selected was not optimal, but land acquisitions were made and earthworks started.
The Beliatta line was built up to Piladuwa station 2 km from Matara station and opened in 1991, but further work stopped after the demise of Premadasa. The stalled railway extension recommenced in March 2006 under President Mahinda Rajapaksa with the 170m long bridge over the Nilwala River being awarded to State Engineering Corporation and completed in 2008 at a cost of Rs. 91 million, the longest railway bridge in the country. The construction of the Matara-Beliatta railway was awarded to a Chinese contractor on the selected route and is expected to cost $366 million or Rs. 48,300 million for a 24.75 km long single line.
Kandy Expressway
The proposed Expressway to Kandy was inaugurated by President Rajapaksa just prior to his birthday by laying foundation stones at Galagedara, Rambukkana, Galewela and at Kurunegala, but missed the first section of the expressway from Enderamulla to Kurunegala. As early as July 2013, the Cabinet of Ministers gave the nod for China Merchants Holdings (International) Company Ltd. to plan, design, finance, construct and operate the first section of the Northern Expressway system from Enderamulla to Kurunegala.
The construction of the 1.5 billion US Dollar project was expected to commence in January 2014. An expressway from Colombo to Kandy was first mooted in the early 1990s to run along the Kelani valley and turn northwards but abandoned due to environmental issues. A feasibility study of the project was completed in December 2001 by a Swedish consultancy firm. Under the study, the Expressway was to commence from the Kadawatha interchange of the Outer Circular Highway terminating at Katugastota. The Environmental Impact Assessment (EIA) clearance was granted by CEA for the entire trace in May 2008.
The expressway was expected to be built as a privately financed toll road and was offered to international investors. Of numerous proposals received the government had selected a Chinese offer. The selected company, with its holding company Hua Jian Highway Investment Company, manages 6,900 km of toll roads, bridges, and tunnels in China. It is claimed that a local politician instructed that amendments be made to the road alignment. The new alignment needed 17 km of elevated highway over the marshes, disturbed the financial viability of the project, and the investor had second thoughts, hence the omission of laying the foundation stone.
Discussion
The common factor in Sri Lanka’s projects is the lengthy period between project proposal and implementation and politicians’ reluctance to implement a project conceived by another political party. The Katunayake Expressway was messed up when the original route over high land was modified to over the marshes for political gain. The contract was not awarded to the lowest tenderer. The Ranil Wickremesinghe Government terminated the project but did not settle the contractor. The next Government wishing to re-start the project had no option but to settle the previous contractor without leeway for negotiations. The heaviest cost in Katunayake highway was the high cost of construction over the Muthurajawela marshes where dredged sea-sand was used as fill material.
In the Outer Circular Road, the political decision that highway construction should avoid built-up areas requiring demolition of houses has led the route to traverse over paddy fields and marshes. The roads in elevated structures as bridges are supported on piles driven and anchored to the rock. In marshes, the rocky surface is deep below and piling is extremely expensive. The contractors need temporary access over the marsh for construction purposes and the costs are included in prices.
When Rajapaksa wished to take a decision on Norochcholai, CEB did not present the complete picture on Norochcholai and Mawella, and the resolution passed by the Weeraketiya Pradeshiya Sabha. If Rajapaksa was made aware of the complete situation, he would have certainly selected Mawella, which would have considerably reduced construction costs and also running costs, assuring low-cost electricity to the consumer.
On Matara-Beliatta railway, the British selected and reserved route was abandoned for a 120 km/hr speed without looking into realities. Unnecessary pressure was brought on the project staff, resulting in poor route selection and higher costs.
In Kandy Expressway, after international tendering, the Cabinet offered the contract to a reputed company to design, build, run, and return the basis. The contractor was to construct and maintain the highway at own expense with no cost to the country, collecting toll money paid by users and was expected to commence construction by January 2014. But a politician wanted the highway moved over the marshes resulting in 17 km elevated, changed the financial viability of the project and the investor has second thoughts.
The construction of roads on paddy fields or marshes is vastly more expensive than paying compensation and relocation of affected parties. If the Government can acquire suitable lands near expressway junctions and construct apartments of different levels according to the cost of displaced properties, people could be resettled in better housing and road be constructed at a lower cost. For a cost of Rs. 1 billion per km, 125 houses could be constructed at a cost of Rs. 8 million each or a house for every eight m of the road. The additional costs in construction over the marshes are a dead loss, whereas new and improved housing will serve people.
Unfortunately, our politicians with their know-it-all attitude are not prepared to listen to their senior staff in responsible positions. Meanwhile, the individuals in high positions, whose job necessitates providing proper advice, keep mum for personal gain. To avoid the repetition of such mistakes, details of future projects need to be publicized over the internet.
Currently, environmental aspects of projects are ensured by EIA reporting. Similar legislation needs to be enacted for ‘Technical Evaluation of Public Projects’ so that the public and intelligentsia are given an opportunity to express their views and evaluated by an appointed ‘Technical Body,’ to ensure projects be cost-effective, free of political interference for the ultimate good of the country. The politicians too will benefit as they would be free from the public who wish to protest for the slightest, a win-win situation.
Published in the Daily FT on 24 December 2014