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Chinese company given nod to build 40,000 eco-friendly houses for war-affected people
The Resettlement Ministry which, since 2015, promoted an unpopular project to build 65,000 prefabricated steel houses for the war-affected in the North and East this week secured Cabinet approval for a new Chinese initiative to construct 40,000 concrete houses for the same people.
ArcelorMittal, the international steel giant behind the Resettlement Ministry’s original proposal to erect prefabricated steel houses, has pulled out. This was after it was finally decided, following a long protest campaign by civil society groups and local politicians including the Tamil National Alliance TNA), to grant the company the authority to 6,000 and not 65,000, houses. The company felt this was too small a number to invest in.
The Resettlement Ministry still proposes to build 65,000 houses but will start with 40,000. The contractors are now China Railway Beijing Engineering Group Co Ltd and its country representative Yapka Construction (Pvt) Ltd. They are the same parties selected by the Disaster Management Ministry to erect 10,000 of these houses for landslide victims.
Each 650 sq ft house will cost Rs 1.28mn. They will be funded by 100 percent “soft loan” with 15-year repayment and a minimum two-year grace period, the Ministry told Cabinet. The concrete panel dwellings will be built with technology that combines autoclaved lightweight concrete (ALC) panel with light-gauge steel (LGS) roofing system. It has a 14-day rapid construction period and was reportedly environment-friendly.
The precast ALC concrete panel is to be made overseas and imported. However, the Ministry has decided to establish two factories to produce the panels and other housing materials to be used for the projects throughout the North and East. Land has been identified for this purpose in the Mankulam and Batticaloa areas and it is anticipated to use fly ash from the Lakvijaya coal power plant to manufacture the concrete panels.
Cabinet granted approval for negotiations with China Railway and Yapka Construction. The factories are to be established and run with 100 percent self-financing by the two companies. Consent was also granted to exempt items imported for the construction of the precast houses from value added tax, port and airport development levy and nation building tax.
The National Building Research Organisation (NBRO) is to be appointed as the technical consultant to the project at a concessionary fee. A Cabinet Appointed Negotiating Committee will be set up comprising the Secretaries to the Ministries of Megapolis and Western Development, Disaster Management and Resettlement.
To avert disagreement to the Ministry’s latest initiative, a presentation was made to TNA MPs in January this year. Four parliamentarians–S Sritharan, Charles Nirmalanathan, S. Yogeswaran and G. Srinesan–then inspected the Disaster Management Ministry’s model house in Badulla on March 1.
On March 2, Opposition Leader R Sampanthan issued a letter to Resettlement Minister D.M. Swaminathan stating that, “The MPs are satisfied with the house constructed using new technologies and they are of the view that this type of houses [sic] are suitable to the environment and acceptable to the people of the Northern and Eastern Provinces.”
Mr Sampanthan urged Minister Swaminathan to “resolve the pressing need for housing as decided by the Government to construct 65,000 houses using the new technologies of precast cement panel housing for the displaced and resettled people for the N&E provinces as quickly as possible”.
But Cabinet this week also gave the green light to a separate bid by a consortium of humanitarian organisations to build 25,000 traditional brick-and-mortar type permanent houses for the war-affected. This group is led by the UN Human Settlements Programme (UN-Habitat), UN Office for Project Services (UNOPS), Habitat for Humanity Sri Lanka and the Sri Lanka Red Cross Society. The paper was presented by the Ministry of National Policies and Economic Affairs.
The consortium has offered three housing options to the Government. The first costs Rs 1,099,500 per house; the second costs Rs 1,117,700 per house; and the third Rs 1,116,800 a house.
The proposal was submitted in response to a tender floated by the Government. A Cabinet Appointed Negotiating Committee (CANC) and a Project Committee were established and they followed an international bidding process. Forty-one parties expressed interest but only 10 submitted offers conformed to the requirements with financing proposals. The programme was packaged into 500 housing units of 100 packages to encourage small companies.
Based on an evaluation, five bidders were deemed technically qualified. They were Sinohydro Corporation which wanted 75,000 houses; China Jiangxi Corporation which wanted 10,500 houses; Central Engineering Services (Pvt) Ltd which wanted 1000 houses; Access Engineering PLC which wanted 1000 houses; and Sierra Construction Ltd which wanted 9,000 houses. But the lowest price on offer was Rs 1.94 million per dwelling.
However, the National Housing Development Authority (NHDA) engineers’ unit price estimate was Rs 1.52 million (without VAT). The rates submitted by bidders were significantly higher than this. The CANC and PC, therefore, rejected all the proposals submitted through the international competitive bidding process.
It was observed that the consortium of humanitarian agencies, while interested in participating in the tender, was unable to post a bid security due to UN regulations. Therefore, it submitted its proposal outside the tender process before bids closed.
Their prices and financing terms were found to be “very much advantageous to the national economy” (nearly 50 percent of those of other bidders). They will use local labour, materials and small contractors to benefit the local economy and communities. There is also no foreign exchange outflow in terms of their financing proposals.
Cabinet granted approval to allow the existing CANC and PC to finalise the consortium’s proposal and further negotiate the most advantageous terms. It also gave permission to reject all the international competitive bids as recommended by the CANC as the prices were significantly higher than the engineers’ cost estimate.