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Megapolis Ministry dumps WB loan for Puttalam garbage project
The World Bank (WB) and the Ministry of Megapolis and Western Development this week split hairs over the ministry’s decision not to take WB funding for a sanitary landfill at Aruwakkalu in Puttalam.
Issues regarding the project procurement process were first highlighted by the Sunday Times in January this year. China Harbour Engineering Company Ltd (CHEC) won the US$ 100.9 million (LKR 15.64 billion) contract which includes building transfer stations at Kelaniya and Aruwakkalu and railway connectivity lines. The deal was signed in December last year.
But losing bidder M/s Kolon-Hansol-KECC, a joint venture from South Korea, complained to the Procurement Appeal Board (PAB) saying CHEC had not met the mandatory criteria to be eligible for consideration. It said the bidder must either have landfill design experience or submit its application with a joint partner who had such expertise.
Kolon-Hansol-KECC also said CHEC had not provided documentary evidence of its eligibility and qualifications to perform the contract, no joint venture agreement or letter of intent to enter into such agreement, and no bid security or bid security declaration. All were mandatory requirements.
The PAB found merit in the appeal and declared that both CHEC and Kolon-Hansol KECC had not fulfilled conditions in the bid document. It observed, however, that three out of five other rejected parties had met mandatory requirements but were struck off “on not fulfilling lesser critical areas such as not giving full details of personnel, equipment, subcontractors and manufacturers, etc.”
The PAB recommended opening the other five financial proposals; obtaining required clarifications from all bidders; and allowing the Standing Cabinet Appointed Procurement Committee (SCAPC) to negotiate with the bidders who met the essential specifications “with the objective of obtaining a realistic offer, to ensure a tenderer is found within the acceptable cost range”.
Yet the Government proceeded with awarding the contract to CHEC (after opening the financial bids of the rejected parties, as advised). The company had qualified because it submitted a letter of intent to form a consortium with the Designer, Southwest Municipal Engineering Design and Research Institute of China (SMEDRIC), a spokesman maintained.
No negotiations were conducted with the failed bidders as their “overall responsiveness was below the acceptable level”. “The PAB has the right to submit its opinion based on its own analysis,” the spokesman pointed out. “However, in the case of this procurement, the responsiveness of the bid submitted by CHEC was clearly established giving sufficient clarifications.”
It has now emerged that the WB–which had offered funding of US$115 million towards the solid waste management project–had also raised concerns. The two sides had discussed the loan, the WB said in a statement. It was agreed that the Government would proceed with procurement. The Bank would reimburse payments “so long as the procurement processes followed by both GoSL and World Bank procurement rules and the selected contractor met all technical, social and environmental requirements.”
“The GoSL considered these requirements and has decided to use its own funding to finance the urgently needed landfill contract,” the Bank also said, in response to a query from the Sunday Times. “The proposed loan was not yet submitted to the World Bank for consideration and, therefore, there is no loan cancellation by the World Bank.”
The ministry maintained this week that the Government “has not taken any decision not to use the World Bank loan for the project”. But the sanitary landfill is being funded by the Government using consolidated funds disbursed through the ministry, a spokesman also said. The project is expected to be finished by November next year.
The World Bank had flagged issues about procurement, he confirmed, but indicated that it was over the opening of the financial bids of technically nonqualified bidders during the procurement process before award of the contract–which was done on PAB counsel.
The ministry said the WB wanted to complete all environmental and social requirements before starting any operations on the ground. “However, it was an almost impossible and difficult task since the ministry had already started its initials work with determined target of completing the project within a span of 18 months,” the spokesman asserted. (The project was originally planned for three years but expedited after the Meethotamulla tragedy).
This is not to say the ministry wanted to avert social and environmental considerations, he insisted. But these are usually fulfilled in parallel with implementation. The project involves loading municipal solid waste into sealed containers to be transported by rail to a sanitary landfill in Aruwakkalu.