• Successive governments fail to get harbour operational since 2013
• Ministry-level discussions to reach final decision continue: Ports Secy

By Maheesha Mudugamuwa Despite several attempts by successive governments, the controversial Oluvil Harbour, built in 2013 on the east coast, continues to languish without any solution to get it operational again, as it still remains in the discussion stage, The Sunday Morning learnt. The harbour project, mooted by the late Dr. M.H.M. Ashraf in 1994, was initiated in 2008 by former President and now Prime Minister Mahinda Rajapaksa under the “Nagenahira Navodaya” (Eastern Revival) project. Even though the construction work of the project was completed in 2013, the harbour, including all the buildings under the project, remained idle for more than eight years due to environmental issues such as sea erosion, which was further aggravated following the construction of the project. One such major issue faced by the project was the collection of sand at the entrance. This became a severe problem, making it impossible for the Sri Lanka Ports Authority (SLPA) to handle cargo by utilising the resources of the port. Despite several promises made by cabinet ministers during the past two years, no firm decision was taken by the respective authority – i.e. the Ministry of Ports and Shipping – on how the Oluvil Harbour should be utilised for the betterment of the country’s fisheries sector. Speaking to The Sunday Morning, Ministry of Ports and Shipping Secretary U.D.C. Jayalal said that ministry-level discussions were still ongoing regarding the Oluvil Harbour, and that a final decision would soon be taken by them. “We are discussing possible ways to solve the issues at the harbour. So far, we have held several rounds of discussions, but no final decision has been made yet,” he said. Colossal loss to the nation? As per the National Audit Office (NAO), the project was completed with funds received from Nordea Bank of Denmark, which provided a grant of € 86,100 and an interest-free loan of € 46,009,269 in 2008 that was to be paid back in 20 instalments over a period of 10 years commencing 31 March 2011. In addition to the loan and the grant, the SLPA had spent a sum of Rs. 426,487,682 for this project during the years 2000-2010. Accordingly, the tender for the project was awarded in June 2008 to the company that quoted the lowest price from the applications that were submitted by companies in Denmark, which was in accordance with the terms and conditions of the loan. It was initially planned that the loan was to be paid by utilising the income of the twin harbour, but the harbour remained non-operational since its launch. In addition to the loan referred to above, the SLPA paid a sum of Rs. 426,487,682 for sundry activities of the project during the years 2000-2010. Out of this amount, a sum of Rs. 121,355,248 was paid to the Geological Survey and Mines Bureau (GSMB) and the Department of Forests for the supply of rocks. Another sum of Rs. 24,476,732 was paid initially to a private institution for the feasibility study. Notably, the asset was not transferred to the Fishery Harbour Division of the Ceylon Fishery Harbours Corporation (CFHC). Financial irregularities uncovered The audit carried out by the NAO revealed that Nordea Bank of Denmark was selected for obtaining the loan, with the approval of the Cabinet of Ministers, in view of several reasons which included the supply of financial aid for this project under the Denmark Mixed Credit Programme, bearing of the export credit guarantee instalment and bank margin under this programme by the Government of Denmark, and the provision of the grant and the loan free of interest to the Government of Sri Lanka. Accordingly, Nordea Bank made available € 86,100 as a pre-grant payment and € 46,009,269 as an interest-free loan. The loan was given on the condition of repayment and settlement in full in 10 years commencing 31 March 2011. According to the loan agreement, the entire loan amount was due to be received by Sri Lanka in instalments during the period from 30 June 2008 to 30 September 2010. As uncovered by the NAO, despite a date being specified for when the construction work should be completed, it was not included in the contract agreement. In view of the delay in the completion of the project work, the last instalment payment to the contractor was received only on 21 December 2012. Notwithstanding that, the loan repayment commenced on 31 March 2011, in accordance with the loan agreement, and was repaid as specified. As further revealed to the NAO, even though it was agreed, according to the loan agreement, that the full amount of the loan was to be released by 30 September 2010, the project work was completed only in 2012, as plans were not made for the completion of the project work by the 2010 date. As such, it was observed that loan repayment instalments were made before the completion of the project work. Nevertheless, as confirmed by the Department of External Resources, a balance out of the total loan, amounting to € 3,880,990, which remained in the escrow account after incurring expenditures on the port construction, was used for the repayment of the loan. Accordingly, the General Treasury made the loan repayment instalments. The audit report noted that such payments were made without receiving any income from the operations of the port. ‘Yet another white elephant’ Janatha Vimukthi Peramuna (JVP)-affiliated All Ceylon General Ports Employees’ Union (ACGPEU) Deputy General Secretary G. Niroshan alleged that the Oluvil Harbour was yet another white elephant of the former Rajapaksa Government and a loss to the nation. He alleged that despite discussions held by the authorities, the harbour in Oluvil cannot be operated. “This is clearly a useless project. There are a number of such projects and billions of rupees have been spent on these types of projects over many years,” he stressed, adding that legal action should be taken against those who constructed the project without doing the necessary assessments. “At the end, it is the taxpayers’ money that the governments had wasted for useless projects,” he stressed. Attempts made by The Sunday Morning to contact Minister of Fisheries Douglas Devananda and Ministry Secretary Indu Ratnayake were futile. However, commenting on the Oluvil Harbour in March last year, Devananda had told the media that he had received many appeals regarding the Oluvil Harbour and its situation through social media, calls, and meetings. He also stated that several neighbouring villages were badly affected by erosion, which was allegedly due to the port project, according to the complaints he had received. Devananda had further said that the Government could not find solutions immediately, but assured that a permanent solution would be found gradually. When attempting to contact SLPA Chairman Capt. Nihal Keppetipola, his office told The Sunday Morning that the Authority was not currently doing any construction or development work at the Oluvil Harbour.