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Central Expressway Project: Stage 3 runs into controversy

19 Feb 2022

 
  • Chinese bidder was disqualified, procurement process ongoing: Highways Ministry
  • MCCII claims loss to taxpayers will be Rs. 164 b; urges President to consider its bid
  • RDA distances itself from project
  • Bidders pressurising via media and political establishment: Highways official
  By Asiri Fernando Despite allegations of irregularities in the Central Expressway Stage 3 (CEP3) Project bidding process and an appeal to the President by a Fortune 500-linked company, the Ministry of Highways maintains that the tender selection process is still ongoing, with no decision being made, The Sunday Morning learns. According to media reports, the Metallurgical Corporation of China International Incorporation Ltd. (MCCII) wrote to President Gotabaya Rajapaksa earlier this month, expressing concern that its bid for the CEP3 – for the construction of the Rambukkana-Galagedera stretch – was not evaluated properly by the Ministry of Highways’ Cabinet-Appointed Negotiating Committee (CANC) appointed to negotiate the tenders and the project committee. Through the letter, the MCCII had requested the President as follows: “Therefore, alternatively, we seek Your Excellency's indulgence to present this Letter as MCCII’s Official Expressions of Interest to undertake CEP 3-Rambukkana-Galagedera Section on EPC basis…” In the letter to the President dated 10 February, the Deputy Managing Director of MCCII’s local branch had also charged that a decision to select the only other bidder, Lanka Infrastructure Development Consortium (LIDC), would lead to the taxpayer paying Rs. 164 billion more for Stage 3 of the CEP. The MCCII has also alleged that its bid for the tender was not opened, with only the LIDC tender being assessed. When The Sunday Morning reached the Ministry of Highways Secretary R.W.R. Pemasiri regarding the allegations, he stated that the bidding process was ongoing (as of 19 February) with no decision made yet on whom the tender would be awarded to. “The procurement process is still underway. No decision has been taken yet. The CANC has not made a decision yet,” Pemasiri explained, expressing concern about the bidder making the allegations without first utilising complaint mechanisms built into the procurement process. According to Pemasiri, one of the two bidders had been disqualified by the CANC due to them not meeting the established criteria for the project; he would not comment on the allegations further. When asked about the allegations regarding the possible loss of hundreds of billion rupees to the State if LIDC were to be awarded the tender as alleged by MCCII, Pemasiri said that he was unaware of the bidder’s pricing details as the bid was not opened due to disqualification. According to reports on the MCCII letter to the President, the Chinese bidder claims that its bid to the International Foreign Bid to Design, Build, Finance, Operate, Maintain and Transfer (DBFOMT) the CEP3 costs Rs. 210 billion, while the competing bid by LIDC is said to cost Rs. 374 billion. The MCCII also points out that had its bid been selected, it would see upfront investment of $ 120 million into Sri Lanka. “Your Excellency has laid special emphasis for faster communications and access through expressways and highways in ‘Vistas of prosperity and splendour’ for socio-economic upliftment. But, if such projects were to come in the future at high and unrealistic costs, then there is a likelihood for people to question the cost benefit of infrastructure development. This should never happen. Your Excellency, as a Fortune 500 Company and with two decades of working experience in Sri Lanka, we do not wish to challenge Government decisions nor condemn nor dispute the rates of our respected Sri Lankan contractors in order to give the impression that we claim our rates are low and that the project should be awarded to us,” the MCCII has further stated in its appeal to the President. However, industry sources who The Sunday Morning spoke to regarding the allegations made by the Chinese firm questioned if there had been a sudden change in the CANC, with due procedure such as seeking the opinion of the Attorney General on the matter not being followed. Several attempts to reach Minister of Highways Johnston Fernando and Secretary to the President Gamini Senarath regarding the allegations made proved futile. The CEP3 Project Manager A. Hettiarachchi shared similar views as Pemasiri, pointing out that the bidding process was ongoing and functioned with CANC approval and therefore was inline with the procedure. Hettiarachchi, who said he had taken over duties of his post only a few weeks ago, would not comment on specific allegations nor divulge details of the bids. A senior Ministry official, speaking to The Sunday Morning upon terms of anonymity, stated that the letter directed to the President and its release to the media was designed to intimidate those involved in the procurement process. “Why would a bidder do something like this – especially when there is an avenue to complain about any concerns? They were disqualified, so now they are trying to pressure us into accepting their bid. This type of interference leads to corruption,” the Ministry official charged. The MCCII also highlighted that it had a proven track record with many other projects in Sri Lanka including highway projects where the Road Development Authority (RDA) was its employer, adding that it had met or exceeded work schedules. When The Sunday Morning contacted RDA Chairman L.S.V. Weerakoon regarding the CEP stage 3 and allegations made by MCCII, Weerakoon stated that the RDA did not handle Central Expressway projects, stressing that such projects were managed by the Ministry of Highways. The Presidential Media Division responding to a query said that it was not aware if the President has issued any directives or responded to the letter sent by the MCCII. The Sunday Morning emailed the Chinese company for further clarification, with no response. The controversy with the CEP comes in the wake of Sri Lanka dropping a Chinese bid to build a mixed power generation project in the islands off Jaffna following security concerns by neighbouring India and after the bitter dispute surrounding the rejected organic fertiliser shipment of last year, which Sri Lanka decided to settle by making payments worth millions of dollars. With the forex crisis ongoing and debt servicing becoming increasingly challenging, many Sri Lankans have questioned the need to urgently pursue large-scale road infrastructure projects.  These allegations, made in such a backdrop, underline questionable shortcomings in national policy prioritisation and transparency of large projects.  


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