By Maheesha Mudugamuwa
Allegations and counter allegations regarding the $ 2.2 billion Japanese-funded Colombo Light Rail Transit (LRT) project have been circulating on social media, outlining that the cost of the Colombo LRT project is outrageous when compared with a similar project in India.
Information circulating on social media outlined a comparison of the initial cost estimate of $ 1,700 million to construct the 15.3 km-long stretch from Fort to Malabe with the latest estimate, which was at $ 2,200 million.
After demonstrating the calculation of the cost of a kilometre of LRT, the messages contained statements claiming it was many times more expensive than that of similar projects done in other countries – especially in India.
When contacted by The Sunday Morning, Megapolis and Western Development Ministry Colombo Light Rail Transit Project (CLRTP) Project Director Eng. Commander (Rtd.) Chaminda Ariyadasa rejected the allegations and claimed the estimated total cost of the project was $ 2,200 million, including the costs incurred on compensation for land acquisitions, VAT, administration, price escalation, contingencies, and interest during the construction period.
According to Eng. Ariyadasa, the total VAT cost for the project was $ 276 million.
False message?
However, the construction cost to build seven sections was only $ 1,374 million, he stressed.
Acknowledging that he had seen the message circulating on social media claiming that the Colombo LRT project was rather costly compared to similar projects in the region, he said: “A false message is being circulated on social media sites by people with vested interests. As per their calculations, they stated that the entire cost of $ 2,200 million was for the construction of the rail line, which is not true.”
Elaborating further, the Colombo LRT Project Director stressed that it was the very first LRT project of its type to be launched in the country, and also explained that the LRT depot was planned to be constructed on a paddy field.
“Therefore, the initial cost is somewhat higher compared to other similar projects,” he said, adding that the depot is to be built on concrete bars and to lay the foundation, it needs around 7,000 piles.
The current costs are all estimated costs and real prices can be decided only after a competitive bidding process, he stressed.
The planned LRT system is 15.7 km in length with 16 stations from Colombo Fort to Malabe via Battaramulla. It will reduce travel time from Colombo Fort to Malabe to approximately 30 minutes. The loan agreement was signed between Sri Lanka and Japan in March, and accordingly, Japan had extended a yen loan of ¥ 30,040 million (approximately Rs. 48 billion) to Sri Lanka for the project.
It is reported that the loan is offered on highly concessional terms and conditions (40-year repayment period for amounts taken towards consultation services with a grace period of 12 years and 0.1% interest rate per annum for civil works and equipment while 0.01% interest rate p.a. for engineering services) and administered by the Japan International Cooperation Agency (JICA).
The project covers the construction of the 15.7 km elevated railway track, elevated stations and train depot, the procurement of LRT trains, and the installation of electrical, communications, and signal systems. Japan hopes that this project will contribute a great deal to social and economic development in Sri Lanka, especially in Colombo, by providing a safe, reliable, and comfortable commuting system.
Ariyadasa said: “We have signed agreements in March and around 60 Japanese consultants arrived in Sri Lanka and are currently engaged in developing detailed designs and preparing tender documents. Accordingly, the Ministry is expected to award the procurement packages mid next year and begin construction at the end of next year.”
Japanese cost high?
Responding to the allegations levelled that the cost of similar LRT projects in India was lower than in Sri Lanka, Ariyadasa stressed that construction in India was being carried out by Indian contractors and explained that in Sri Lanka, all the construction will be carried out by Japanese contractors in line with European standards.
In addition, as explained by the Project Director, the overall estimation also included a buffer amount. “We will also have to import all the compartments from Japan, and when compared to the prices of Chinese or Indian compartments, Japanese compartments cost 25% more.
“Currently, we’re preparing tender books. However, we should spend 30% of the loan amount to import Japanese products,” he stressed.
Meanwhile, the messages circulated on social media also claimed that as per the estimation done by Korean consultant companies Seoyoung Engineering Co. Ltd. and Saman Corporation and the CECB (Central Engineering Consultancy Bureau) in a joint venture under the supervision of the Ministry of Megapolis, which was also approved by TEC, the construction cost per kilometre was only $ 39 million and therefore, the cost of the Japanese LRT line was 369% more expensive than the engineers’ estimate of the LRT line from Ingurukade Junction to Moratuwa.
It further alleged that the JICA had misled the public by showing it was charging interest of only 0.01%, but increased the cost by 369%.
JICA Sri Lanka Office Senior Project Specialist Namal Ralapanawe told The Sunday Morning that JICA had signed a loan agreement with the Government of Sri Lanka (GoSL) for the amount of ¥ 30,040 million (approx. $ 300 million), towards the fund requirement of the project.
“On the request of GoSL, the loan has been provided under Special Terms of Economic Partnership (STEP). STEP terms are only provided for projects that utilise Japanese technology, and the eligibility for bidding in the main contracts are limited to Japanese companies or Japanese and Sri Lankan joint ventures. The interest on disbursements for civil work and equipment is 0.1% p.a., and for consulting services, it is 0.01% p.a. The repayment period is 40 years, which includes a 12-year grace period. GoSL has requested funding in several slices over the project implementation period under the same terms, to cover eligible costs of the project. By using this method, GoSL will be able to request the loan slices as per actual contract amounts and fund requirements,” Ralapanawe stated.
“JICA’s role in the project is as the Official Development assistance lender to GoSL. To enable both GoSL and JICA to make the necessary decisions, JICA funded the feasibility study for the project on a grant basis. Under this study, the project cost has been estimated by the consultants to the possible level of accuracy according to available information and data. Actual costs can be accurately determined only when the bids for the several contract packages are concluded. A detailed breakdown of the cost estimate is not disclosed under JICA guidelines to avoid influencing bid prices,” the Senior Project Specialist said.
Allegations and counter allegations regarding the $ 2.2 billion Japanese-funded Colombo Light Rail Transit (LRT) project have been circulating on social media, outlining that the cost of the Colombo LRT project is outrageous when compared with a similar project in India.
Information circulating on social media outlined a comparison of the initial cost estimate of $ 1,700 million to construct the 15.3 km-long stretch from Fort to Malabe with the latest estimate, which was at $ 2,200 million.
After demonstrating the calculation of the cost of a kilometre of LRT, the messages contained statements claiming it was many times more expensive than that of similar projects done in other countries – especially in India.
When contacted by The Sunday Morning, Megapolis and Western Development Ministry Colombo Light Rail Transit Project (CLRTP) Project Director Eng. Commander (Rtd.) Chaminda Ariyadasa rejected the allegations and claimed the estimated total cost of the project was $ 2,200 million, including the costs incurred on compensation for land acquisitions, VAT, administration, price escalation, contingencies, and interest during the construction period.
According to Eng. Ariyadasa, the total VAT cost for the project was $ 276 million.
False message?
However, the construction cost to build seven sections was only $ 1,374 million, he stressed.
Acknowledging that he had seen the message circulating on social media claiming that the Colombo LRT project was rather costly compared to similar projects in the region, he said: “A false message is being circulated on social media sites by people with vested interests. As per their calculations, they stated that the entire cost of $ 2,200 million was for the construction of the rail line, which is not true.”
Elaborating further, the Colombo LRT Project Director stressed that it was the very first LRT project of its type to be launched in the country, and also explained that the LRT depot was planned to be constructed on a paddy field.
“Therefore, the initial cost is somewhat higher compared to other similar projects,” he said, adding that the depot is to be built on concrete bars and to lay the foundation, it needs around 7,000 piles.
The current costs are all estimated costs and real prices can be decided only after a competitive bidding process, he stressed.
The planned LRT system is 15.7 km in length with 16 stations from Colombo Fort to Malabe via Battaramulla. It will reduce travel time from Colombo Fort to Malabe to approximately 30 minutes. The loan agreement was signed between Sri Lanka and Japan in March, and accordingly, Japan had extended a yen loan of ¥ 30,040 million (approximately Rs. 48 billion) to Sri Lanka for the project.
It is reported that the loan is offered on highly concessional terms and conditions (40-year repayment period for amounts taken towards consultation services with a grace period of 12 years and 0.1% interest rate per annum for civil works and equipment while 0.01% interest rate p.a. for engineering services) and administered by the Japan International Cooperation Agency (JICA).
The project covers the construction of the 15.7 km elevated railway track, elevated stations and train depot, the procurement of LRT trains, and the installation of electrical, communications, and signal systems. Japan hopes that this project will contribute a great deal to social and economic development in Sri Lanka, especially in Colombo, by providing a safe, reliable, and comfortable commuting system.
Ariyadasa said: “We have signed agreements in March and around 60 Japanese consultants arrived in Sri Lanka and are currently engaged in developing detailed designs and preparing tender documents. Accordingly, the Ministry is expected to award the procurement packages mid next year and begin construction at the end of next year.”
Japanese cost high?
Responding to the allegations levelled that the cost of similar LRT projects in India was lower than in Sri Lanka, Ariyadasa stressed that construction in India was being carried out by Indian contractors and explained that in Sri Lanka, all the construction will be carried out by Japanese contractors in line with European standards.
In addition, as explained by the Project Director, the overall estimation also included a buffer amount. “We will also have to import all the compartments from Japan, and when compared to the prices of Chinese or Indian compartments, Japanese compartments cost 25% more.
“Currently, we’re preparing tender books. However, we should spend 30% of the loan amount to import Japanese products,” he stressed.
Meanwhile, the messages circulated on social media also claimed that as per the estimation done by Korean consultant companies Seoyoung Engineering Co. Ltd. and Saman Corporation and the CECB (Central Engineering Consultancy Bureau) in a joint venture under the supervision of the Ministry of Megapolis, which was also approved by TEC, the construction cost per kilometre was only $ 39 million and therefore, the cost of the Japanese LRT line was 369% more expensive than the engineers’ estimate of the LRT line from Ingurukade Junction to Moratuwa.
It further alleged that the JICA had misled the public by showing it was charging interest of only 0.01%, but increased the cost by 369%.
JICA Sri Lanka Office Senior Project Specialist Namal Ralapanawe told The Sunday Morning that JICA had signed a loan agreement with the Government of Sri Lanka (GoSL) for the amount of ¥ 30,040 million (approx. $ 300 million), towards the fund requirement of the project.
“On the request of GoSL, the loan has been provided under Special Terms of Economic Partnership (STEP). STEP terms are only provided for projects that utilise Japanese technology, and the eligibility for bidding in the main contracts are limited to Japanese companies or Japanese and Sri Lankan joint ventures. The interest on disbursements for civil work and equipment is 0.1% p.a., and for consulting services, it is 0.01% p.a. The repayment period is 40 years, which includes a 12-year grace period. GoSL has requested funding in several slices over the project implementation period under the same terms, to cover eligible costs of the project. By using this method, GoSL will be able to request the loan slices as per actual contract amounts and fund requirements,” Ralapanawe stated.
“JICA’s role in the project is as the Official Development assistance lender to GoSL. To enable both GoSL and JICA to make the necessary decisions, JICA funded the feasibility study for the project on a grant basis. Under this study, the project cost has been estimated by the consultants to the possible level of accuracy according to available information and data. Actual costs can be accurately determined only when the bids for the several contract packages are concluded. A detailed breakdown of the cost estimate is not disclosed under JICA guidelines to avoid influencing bid prices,” the Senior Project Specialist said.