• Cites issues in planning, land acquisition, institutional oversight
• Notes rigourous assessments could have saved Rs  6.86 b

A Presidential Secretariat-appointed review committee, which found that planning, land acquisition and contract management failures had contributed to major cost overruns and delays in the Mahaweli Water Security Investment Programme (MWSIP), has recommended that accountability be established among all parties involved before any further increase in the cost of a key canal construction contract related to the project is approved.

The observations are contained in a report prepared by the MWSIP Review Committee, which was appointed by the Presidential Secretariat to examine a Cabinet of Ministers paper seeking approval to increase the value of a contract for the construction of the main canal from Nebagahawatta to the entrance of the Mahakitula Reservoir under the North Western Province Canal Project.

The report, dated 22 December of last year (2025) and addressed to the Agriculture, Livestock, Land and Irrigation Minister K D Lal Kantha, was prepared by committee members, engineer Nalinda Thilakaratne, a Board Member of the Mahaweli Authority, and engineer B H M P Amunumullagama, who served as the coordinating officer to the Deputy Lands and Irrigation Minister and represented the Presidential Secretariat-appointed review committee. The committee had been asked to study the proposed increase in the contract value and the circumstances that led to it. 

According to the report, Cabinet approval was being sought to raise the contract value from Rs  15.15 b to Rs  16.60 b. The committee noted that the contract had originally been awarded in June 2018 for Rs  7.22 b with a completion period of 917 days and was expected to be completed by May 2021. Since then, six extensions of time have been granted, mainly because of delays in handing over land required for construction. Cabinet approval had already been obtained in 2023 to increase the contract value from Rs  7.22 b to Rs  15.15 b. 

After reviewing project documents and holding discussions with officials from the line Ministry, the Project Management Unit (PMU) and the Project Management, Design and Supervision Consultant (PMDSC), the committee stated that it had identified significant weaknesses in project planning, contract administration, consultant performance and institutional oversight. 

According to the report, these shortcomings had resulted in contractor claims amounting to about Rs  2 b and additional price escalation costs of around Rs  5 b. Among the issues raised by the committee was the absence of an approved team leader for the consulting team since 2021. Despite this, contractual payments, including monthly payments amounting to about Euros 26,000 and additional local payments of nearly Rs  16 million a month, had continued. The committee stated that this matter required an immediate investigation. 

The report also questioned why the contract had been awarded before the necessary land had been acquired. It noted that the contract was awarded and signed in 2018 and that an advance payment of Rs  973 million was made even though the required land had not been fully handed over for construction. According to the committee, the first section of land was handed over about 76 days after the commencement of the contract, and it stated that a detailed investigation was needed into why the project had proceeded before land acquisition had been completed. 

The committee also found that despite repeated delays, decisions granting extensions of time had not been challenged by either the PMU or the Ministry. It observed that some delays were linked to late instructions issued by engineers and the inadequate deployment of resources by the contractor, but, these factors had not been properly considered when granting extensions. It further stated that the consultant had failed to introduce practical measures to reduce risks associated with land acquisition delays, despite the difficulties being known in advance. 

The report further noted that repeated design changes had taken place during construction, saying that they had led to additional variations and higher costs. It stated that more comprehensive site investigations and better planning before calling for tenders could have reduced the need for the later changes. The committee also raised concerns about inadequate working space along parts of the canal route and shortcomings in land acquisition, noting that these had resulted in further design revisions and increased expenditure. It recommended additional investigations into these matteRs  

Questions were also raised over several payments made under the contract. The committee noted that retention money and special advances had been released in a manner that appeared inconsistent with contractual provisions and stated that a detailed examination was needed to determine the basis for those payments. It also observed that nearly Rs  987 million had already been paid to the contractor without fresh Cabinet approval, despite an earlier Cabinet decision limiting approval for claims to Rs  44 million. The committee said that the basis for those payments should be examined further. 

Another concern raised in the report relates to the composition of a separate technical review committee. It noted that three out of its five members were connected to the same project, raising questions about the independence of the assessment process. In its conclusions, the committee stated that the proposed increase in the contract value was largely the result of systemic failures in planning, land acquisition, consultant performance, contract administration and institutional supervision involving the consultant, the PMU and the line Ministry. The committee added that if extensions of time had been assessed more rigourously under the relevant contract conditions, contractor claims estimated at around Rs  1.86 b and price escalation costs of about Rs  5 b could have been substantially reduced. 

It recommended that before any further increase in the contract value is approved, accountability measures should be established for all parties involved, including the consultant, the contractor, the PMU and the Ministry. It also called for lessons learned from the MWSIP to be formally documented and applied to future projects undertaken under the programme.

Earlier this month (June), the Citizen Power Against Bribery, Corruption and Waste organisation wrote to the Asian Development Bank requesting an independent investigation into the project, asking the Bank to suspend major commitments under the second stage until such a review is completed.