News
RDA grants extension to local builder under a cloud
The Road Development Authority (RDA) is granting an extension to a local builder despite protracted delay in implementing a Kuwait-funded bridge project, to avoid disruption to nine other large contracts awarded to the same company.
The decision is being called into question by other RDA officials, including union members, who point out that there were contractual provisions to impose penalties on companies that did not carry out their obligations.
At a meeting with Highways Minister Lakshman Kiriella yesterday, the RDA decided it will give K D Ebert time till mid-January to resume work on bridges it had abandoned for the past few weeks. One of these is a 19m long structure on the Kaduwela-Biyagama Road where building is at a standstill. Several other bridges are at various stages of construction.
The respective project director recently issued a termination letter to the company but the RDA has now decided to reverse that decision. The Minister, Highways Ministry Secretary D C Dissanayake, and RDA Chairman N. R. Suriyarachchi are particularly in support of an extension, authoritative officials said.
“Contractually, when a contractor stops attending to work for a certain period of time, we issue a ‘notice to correct’,” explained D K R Swarna, RDA Director General. “If they still do not comply, we can terminate within one month.”
K D Ebert was first given ‘time to correct’ till November 30. “But they said they were still having some problems, so they requested more time and we decided to give them a chance to attend to it again,” Mr Swarna said. He confirmed that some jobs had not been done for an extended period of time. “We want them to at least mobilise activity at the sites and start the work,” he said.
It is learnt that the company has also been seeking payments, some of which were withheld due to these delays, for work so far completed. Mr Swarna said the RDA will disburse the funds on examination of receipts. Among the other projects K D Ebert is implementing are the Badulla-Chenkaladdy Road and some sections of the Asian Development Bank-funded Integrated Road (iRoad) Investment Programme.
Mr Suriyarachchi revealed that the company has claimed it faced financial difficulties due to recent diversification of activities. “All these contracts were given during the tenure of the previous Government but there was no mischief in the award of the tenders,” he told the Sunday Times. “With time, the company has faced difficulties.”
“When this came up to me and the (Ministry) Secretary, we have to look at the broader angle,” he continued. “There are instructions to terminate, but if you stop the project and blacklist the company it would be reflected in their cash books and would affect our other contracts.”
The Bank of Ceylon (BOC) had granted bank guarantees to all the projects, the RDA higher-ups said. “They assured money to the company when it was tendering,” Mr Suriyarachchi said. “But I think the necessary support from the bank was not forthcoming.”
It was not immediately clear why the BOC had not honoured its commitments. The RDA had even gone so far as to summon bank officials for a meeting in this regard. It could not be verified whether it will now be a policy of the RDA to grant other companies in financial difficulty similar treatment. And there was also no explanation how the Badulla-Chenkaladdy Road was awarded to K D Ebert despite its non-performance in already awarded contracts being evident to the RDA and Ministry of Highways.
Mr Suriyarachchi referred the Sunday Times to the Ministry Secretary for further clarification saying the project came under his direct purview. But Mr Dissanayake refused to divulge details. “It is a situation in which we are taking some actions,” he said. “I don’t want to give that information to the papers. These are internal matters and we are dealing with the contractors.”
There are questions, too, over a Chinese company that K D Ebert had tied up with in order to bid for the project as a joint venture. “They cannot be located,” a senior RDA official said. “We sent a few letters but did not get a response.”
“They will have to remobilise the activities,” Mr Swarna said. “There are definitely penalties that can be imposed but our main concern is that they are not doing only this big project.” Progress in some bridges has been as low as 10-15 percent, even less. The Kaduwela Bridge is due to be completed by April 2018.
“The right procedure is to take delay charges,” an RDA official said. “If the company objects, it can go for arbitration.”
Meanwhile, a spokesman for K D Ebert, when recently contacted, said the delay was not the company’s problem but that there had been a contractual dispute which resulted in their claims not being recommended. This led to an outstanding payment of Rs 120mn due from the RDA. He said this has now been resolved.