News
Bribery Com. summons RDA project unit
View(s):- Charges and controversy over multibillion-dollar elevated highway from New Kelani Bridge to Athurugiriya
By Namini Wijedasa
The project management unit (PMU) of the Road Development Authority (RDA) has been summoned by the Bribery Commission to provide a statement on the controversial tender for the proposed elevated highway from New Kelani Bridge to Athurugiriya.
The Commission recently took over several files related to the bid, authoritative RDA sources said. Its Investigation Division this week notified PMU head K. Selvanathan to send a suitable official to its office tomorrow to provide a detailed statement on the project documents.
Meanwhile, a Cabinet paper is due to be presented by Highways Minister Bandula Gunawardena requesting approval for more than Rs 35.1bn in land acquisition, resettlement and relocation costs associated with the project for 2023-24 alone.
The memorandum seeks to determine whether the Cabinet is willing to continue with the project in view of “the current economic crisis faced by the country”. If so, the Highways Ministry wants the direct agreement and concession agreement to be signed with the selected contractor, China Harbour Engineering Corporation Ltd (CHEC).
Under the agreed terms, the RDA will make a semi-annuity payment of US$ 54mn–Rs 19bn at prevailing rates–for 15 years starting from the commercial operation date, a draft Cabinet memorandum says. (This will be three years after the effective date of the concession agreement, which is likely to be in 2027). A semi-annuity payment is a fixed fee every six months.
Implementation will be on a design, build, finance, operate, maintain and transfer (DBFOMT) basis. Official documents dress the project up as a “foreign direct investment” although CHECH will recover all of its funds via annuity payments. Approval is also being sought for sweeping tax waivers under the Strategic Development Project Act and the Board of Investment Act.
The Cabinet first granted permission in April 2020 to construct the highway as a DBFOMT project. In May that year, the RDA called tenders for the 16.4km road. CHEC was subsequently selected as the lowest substantive responsive bidder and received a letter of acceptance.
But the tender award is widely criticised within the cutthroat road-building sector. It also has RDA detractors who insist that the contract terms and project model are significantly disadvantageous to the Authority.
Competitors allege bid-rigging, a practice that is now increasingly common. Among other ways, it is done by designing tender criteria to suit handpicked companies. When the Highways Ministry invited requests for proposals (RFPs) for the elevated highway, the sources claim “very tough conditions” were included to eliminate five prequalified bidders.
They also maintain that officials bent backward to accommodate CHEC’s demands by granting concessions after bids were closed — such as changing the annuity payment from rupees to dollars; providing a sovereign guarantee; waiving the requirement for an upfront payment of US$ 140mn; and allegedly accepting a concession agreement drafted by CHEC that contained “major deviations” from an available draft.
The Highways Ministry says the proposed road is essential to link the expressway network, thereby improving connectivity between the Hambantota and Colombo Ports, and the airports at Katunayake and Mattala. It is also expected to reduce traffic congestion.
Phase II of the project from Rajagiriya to Athurugiriya is still facing a court challenge over concerns that it will harm the Thalangama wetland.
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