Chinese elbow out other contractors in Central expressway deals
While Japanese funding has been offered for part three of the Central Expressway and with that the Government is 0bliged to hire Japanese contractors, there are allegations that a powerful Chinese firm is behind the soon-to-be awarded Japanese bidder.
Taisei Corporation, with which the government is having negotiations, is backed by China Harbour and Engineering Company (CHEC), the Business Times reliably learns. CHEC is also handling the Colombo Port City construction and was responsible for the Southern Expressway.
With its complex terrain and land acquisition requirements, the 32.5 km Central Expressway Project Section 3 from Pothuhera to Galagedara is believed to be one of the most expensive road developments undertaken in recent times.
Although Fujita Corporation was the lowest bidder for this project with a price difference of almost Rs. 12 billion, the Cabinet Appointed Negotiation Committee invited Taisei for negotiations. Taisei’s bid price was Rs. 159 billion while Fujita quoted lower at Rs. 147 billion. The project is based on a yen loan equivalent of US$ 1 billion from Sumitomo Mitsui Banking Corporation for the tender exclusively for Japanese / Sri Lankan Companies (Prime/Sub Contractors).
The tender closing date was November 23, 2016. The funding for the project is exclusively being arranged by Japanese government. Japan’s involvement was intended to rebuild strong bilateral relations between Sri Lanka and Japan and also to rebalance geopolitical influence in the region which is presently seen as Chinese dominance in the island, a senior Road Development Authority (RDA) official said.
In accordance with a decision taken by the Cabinet Committee on Economic Management (CCEM), the Japanese Embassy here shortlisted three strong Japanese companies six months ago and requested the RDA to select the commercially most competitive firm. Apart from Taisei the other two companies were Penta Ocean Construction Co. Ltd and Wakachiku Construction Co. Ltd.
However all three failed to present their bids despite more than four extensions being offered.
The Japanese Embassy and the Sri Lankan Prime Minister’s office then intervened and cancelled this tender, he added.
Following a CCEM directive, the Highways Ministry requested the Japanese Embassy to submit fresh bids of preselected companies within two weeks, complete with bid bonds.
Fujita and Taisei then submitted proposals. There has been no official communication to Fujita as of now, a company official said adding that even though the Japanese government has given its backing to Fujita and also wanted a very transparent tender process.
Taisei, it is alleged, has an agreement with CHEC to subcontract major portions of the work.