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Billion-dollar Northern housing tender resurfaces
View(s):Cabinet paper for new committee to re-evaluate contract, but powerful agents hang around Rehabilitation Ministry
By Namini Wijedasa
The tender for a massive project to build houses for conflict-affected people in the North and East is to be reopened by the Ministry of Rehabilitation and Resettlement, authoritative sources said, amid reports that the billion-dollar contract will be awarded again to the same French Company.
It is learnt that the decision to reopen the tender was made on Wednesday. A Cabinet paper is to be presented shortly seeking approval to set up a fresh Technical Evaluation Committee for the deal.
The Ministry first called bids for the construction of 65,000 houses in October 2015 but the project soon ran into controversy after reports emerged that it was to be awarded to the French steelmaker ArcelorMittal at Rs 2.18 million a house.
A Cabinet subcommittee was appointed to review the tender, amid public and vocal lobbying for ArcelorMittal by the Ministry of Rehabilitation and Resettlement. In the meantime, a civil society group submitted an alternative proposal for brick-and-mortar houses costing between Rs. 800,000 and Rs. 1 million a unit.
The sources said, however, that the ministry was insistent on giving ArcelorMittal the deal. There is now indication that the number of houses will be significantly bumped up and the tender offered out in one block. Anyone who bids will have to provide financing — much more than US$ 1 billion that was initially required — while the bid prequalification requirements are likely to be unrealistic foranyone but a company the size of ArcelorMittal.
“The intention of Ministry bigwigs is to somehow award the billion-dollar contract to ArcelorMittal,” one source said, on condition of anonymity. “The local agent Ravi Wettasinghe and the French principals were hanging around the ministry, in the Minister’s room, all week. Mr Wettasinghe has been visiting the ministry very often.”
The Sunday Times independently confirmed that this agent had been frequenting Minister Swaminathan’s office, making a mockery of the open, transparent bidding process the Government has publicly committed itself to. Mr Wettasinghe is a staunch supporter of the United National Party (UNP) and has, in the past, funded it. The sources said several members of Prime Minister Ranil Wickremesinghe’s inner circle were also supportive of the project being granted to ArcelorMittal despite having to eventually repay a towering dollar loan.
It is learnt that ArcelorMittal may have agreed to change the construction material from prefabricated steel to a cheaper option which would enable the company to offer each unit at a lower price. Earlier this year, Moratuwa University experts found after a detailed technical study that the steel houses ArcelorMittal had earlier proposed had inadequate foundations, insufficient roof support, were at risk of corrosion, were poorly ventilated and had no hearth and chimney.
They warned that the dwellings had poor or non-existent capacity for extension or repair, a much shorter life-span than block wall houses, were unlikely to create a sense of ownership, unlikely to foster the local economy or generate employment and were at least double the cost of a block wall house.