News
Waiting, waiting and waiting for a roof above their heads
- It’s been 10 years since the war ended, four years since this Government came into power, but promised housing for the war-torn people have not materialised
- Saga of dubious tenders and interested parties trying to foist pre-fabricated housing
Four years ago, the Government promised mass-scale housing for the North and East’s war-displaced. It has still not delivered, leaving some of the country’s most underprivileged families in limbo.
One of the main reasons for the protracted delay is an unshakeable fixation with prefabricated houses — first steel, now concrete — which their promoters insist will be so much quicker to build. The irony cannot be lost.
The saga, which the Sunday Times has tracked from the start, follows a clear pattern that becomes even more evident in hindsight. It involves fixers inside and outside Government and belies the unshakeable truth that this administration has no concern for the housing needs of a poverty-stricken populace.
It began with D M Swaminathan, a senior member of the United National Party (UNP), who held the resettlement portfolio. He quickly became the face of a Government pledge to build 65,000 houses in the North and East. Cabinet granted approval in September 2015 and expressions of interest (EOI) were called 12 days later.
But a month before the tender was advertised, Mr Swaminathan divulged to the Tamil National Alliance that a French firm would get the contract. It made a mockery of the tender process, TNA Parliamentarian M A Sumanthiran said at the time.
That company was the Luxembourg-headquartered ArcelorMittal, a leading integrated steel and mining company. It promoted prefabricated housing with steel structures. The local agent was Kumarca Engineering and Management (Pvt) Ltd, fronted by businessman Ravi Wethasinghe. And the initiative first emerged as an unsolicited proposal.
Bidders were required to complete the project in five years. They had to raise concessionary finance for the billion-dollar initiative. In other words, a foreign loan. Had it gone through, the sharp depreciation of the rupee would have spelt a repayment disaster.
Interested parties had 25 days to put in proposals. When they wanted an extension, three days were granted. And after EOIs were received and entities shortlisted, the Ministry changed the requirements from five to four years for project completion.
There were 35 submissions. Eight bidders were shortlisted in the penultimate round. But the process was skewed in favour of ArcelorMittal from the outset.
The contract would have been awarded had it not been for spirited objections from civil society groups. They questioned the cost of each house — a steep 2.1 million rupees (inclusive of a television set, some furniture and solar panels) — and the fast-tracked selection of a contractor.
The structures were to be imported and assembled, shutting out local labour. There would be no Sri Lankan value addition. It is now known that the pricing was tailored to give the contractors a sweeping profit.
The National Construction Association of Sri Lanka (NCASL), too, objected. By lumping all of the houses into one big project and placing exclusionary conditions in the request for proposals (RFP) document, domestic companies were precluded from qualifying. The NCASL wanted the 65,000 divided into four or five packages. There was no reason why this couldn’t be done — but it wasn’t.
The ArcelorMittal initiative was a “cookie-cutter” approach. Visits to model houses by technical teams threw up multitudinous cultural, environmental, engineering and other issues.
For instance, the houses had inadequate foundations, insufficient roof support, were at risk of corrosion, poorly ventilated and without hearth or chimney. They 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 and generate employment and were at least double the cost of a block wall house.
Those were only a few of the shortcomings. There were many more, including the crucial fact that beneficiaries were not given a choice. They were borne upon to accept these houses or nothing at all.
These concerns were repeatedly and openly aired. But the Resettlement Ministry, supported by the Government, insisted that the ArcelorMittal project was optimum because it came with financing. The NCASL was quietly asked to back off on the promise they will receive other work.
There began a long process of aggressive promotion in the North and East combined with proposal tinkering in Colombo to push the contract through. Families were asked to sign papers requesting the house. Some, in desperation, left notes on the application forms saying they would prefer a brick dwelling.
The Resettlement Ministry did not inform prospective recipients that Cabinet approval for the prefabricated steel houses was strictly tied to the condition that the beneficiaries wanted them. Against instructions, no alternative was offered. The advertisement said the houses would be built by “the leading company in the world” but avoided naming the firm.
In the meantime, the cost of each house was brought down to Rs 1.6mn by removing furniture, fittings and WiFi from the deal. But for the Resettlement Ministry, it was still ArcelorMittal or no one else.
Then, faced with an onslaught of criticism, the Prime Minister appointed an independent team of experts. By October 2016, on its advice, the Cabinet Committee on Economic Management (CCEM) recommended that the project be re-tendered in smaller packages and for the bid bond to be lowered. Already, one year had been lost.
On the ground, opposition was growing. The TNA was against steel prefabricated houses, as were the Jaffna District Coordinating Committee and the Northern Provincial Council (NPC).
Separately, an independent, multi-disciplinary group presented the Government with an alternative proposal for brick-and-mortar housing, complete with a financing proposal. It was supported by organisations and networks, including UN bodies, engaged in housing.
The idea was to build traditional cement or brick houses and it had a financing proposal, including a term sheet from a consortium of banks raising domestic resources through a rupee bond in four tranches of Rs 16.25 billion each. This was ignored.
And, by November 2016, Mr Swaminathan once again said the Government would sanction prefabricated steel houses for the North and East despite a Cabinet Appointed Negotiating Committee (CANC) rejecting the ArcelorMittal project and also recommending fresh tenders.
The TNA revealed that Minister Swaminathan had been telephoning their MPs and urging them to ask for the prefabricated houses in their respective electorates. But all 16 of the Alliance’s MPs signed a letter that said they were against these structures for reasons of climatic unsuitability, flimsy construction, lack of durability, unjustifiable high cost, so on.
On November 9, 2016, Resettlement Ministry Secretary V Sivagnanasothy was transferred out. He was a member of the CANC that rejected the ArcelorMittal initiative and called for fresh tenders.
In the face of continued resistance, President Maithripala Sirisena passed off the project to Special Projects Minister Sarath Amunugama for a recommendation. He returned to the CCEM in April 2017 with a suggestion to grant 6,000 houses to ArcelorMittal.
But Mr Sumanthiran maintained that, if the size of the project was to be reduced, fresh tenders must be called as many more contractors would now qualify and offer better prices. The Resettlement Ministry did not call for fresh bids.
Instead, in June 2017, the Ministry summoned District and Divisional Secretaries and Directors of Planning of the North and East for a progress review meeting and used it to promote the ArcelorMittal project. It was chaired by Minister Swaminathan and company representatives were present. More than half the event went towards plugging the housing project.
By now, prefabricated steel houses had been rejected by the CANC, the TNA, the NPC, District Coordinating Committees, the Parliamentary Sectoral Oversight Committee, and the Prime Minister’s team as well as local officials and civil society groups.
But the project only got shelved — ironically — when ArcelorMittal pulled out; 6,000 houses were simply not worth the trouble for the international steel giant.
Today, backers of the steel houses admit they “made a mistake” (although Minister Swaminathan is yet to say it). It’s too little, too late for the displaced of the North and East.
| Alternative proposal on hold due to high management fee In May 2018, after ArcelorMittal pulled out, the Cabinet sanctioned a contract to build 40,000 prefabricated concrete houses in the North and East — without tender—to a Chinese company. Once again, the proposal was put forward by the Resettlement Ministry. China Railway Beijing Engineering Group Co Ltd’s local agent was Ravi Wethasinghe’s Yapka Construction (Pvt) ltd. But it didn’t go ahead. This time, it was the Indian Government that put a dampener on the Minister’s project. It questioned the decision to give the hefty tender to a company that “had not even built one house yet in Sri Lanka” and had not done a comprehensive study of conditions in the respective areas. Meanwhile, there was yet another housing project waiting in the wings. The Ministry of National Integration and Reconciliation, headed by Prime Minister Ranil Wickremesinghe, had as its Secretary Mr V Sivagnanasothy — the man who had been kicked out of the Resettlement Ministry for opposing the ArcelorMittal project. In September 2017, his Ministry floated a tender for 50,000 permanent brick-and-mortar houses as part of a resettlement and reconciliation initiative. At the end of that process, Cabinet gave approval for 25,000 brick houses to a consortium of humanitarian agencies led by UN-Habitat, UNOPS, Habitat for Humanity and the Sri Lanka Red Cross Society. This contract was what emerged from the “alternative proposal” put forward in 2016 by civil society groups. The Government said the Treasury would pass money for it. But last month, the Prime Minister’s office notified the Consortium that the Treasury had backed out. One reason may be the 10% management fee to be retained by UNOPS/UN-Habitat, as pointed out by Finance Minister Mangala Samaraweera in his observations last year. Action should be taken by the implementing agency “to bring down the management fee to be paid to the UNOPS/UN-Habitat to an acceptable level,” he wrote. The management fee is 8.97%, according to documents seen by the Sunday Times. It covers technical and support staff required for construction of houses, including logistics, and overhead costs. But for now, that effort seems stalled from the Government side. Separately, the Government has released money through the recent vote-on-account for 10,000 brick-and-cement-sand-blocks type traditional houses in the same areas. The first phase of 4,750 was started under the Resettlement and Rehabilitation Ministry, which is now under Prime Minister Ranil Wickremesinghe’s purview. There’s more: In October 2018, the Ministry of Finance sought Cabinet approval to “immediately proceed with the construction of 28,000 (houses) in the Northern and Eastern Provinces of Sri Lanka as Phase 1 by the consortium partners ND Enterprises (India), Yapka Construction (Pvt) Ltd (Sri Lanka) and Archedium (Pvt) Ltd (Sri Lanka) in the first instance for completion within 24 months at a fixed base price of LKR1,280,000 per house with 100% funding on soft financial terms.” ND Enterprises an Indian company, because the project swung in India’s direction after New Delhi opposed the Chinese bid. The Indian High Commission nominated six parties of which this consortium was found to be suitable. To begin with, it expects to build 7,000 prefabricated concrete houses in the East. The Finance Minister has proposed to allocate the remaining houses to the balance six parties on a first-come first-serve basis. He also says, however, that “Whoever satisfies the successful completion of Phase I within the stipulated time will be considered for Phase 2”. Community leaders are now calling for a model prefabricated house to be built in the East for the inspection of beneficiaries. There must, they say, be an independent technical evaluation of these dwellings — particularly after of the ArcelorMittal fiasco. No such house has been erected. From the beginning, the focus of all these initiatives has been who gets the contract rather than who gets the houses. The housing needs of the North and East were estimated by this administration to be 137,000 dwellings. How many have been built? In May, thousands of families will mark 10 years since the end of the war, staring bleak-eyed out of their shacks — having been failed repeatedly by a Government that has placed the interests of a handful of people over the well-being of an entire population.
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