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Elevated highway project: Top RDA officials testify before Bribery Commission
View(s):The two most senior officers of the project management unit (PMU) overseeing the Road Development Authority’s (RDA) proposed elevated highway from New Kelani Bridge to Athurugiriya gave statements to the Bribery Commission this week.
PMU head K. Selvananthan was reportedly asked to bring additional documents to the Commission’s next inquiry date. He was also required to explain how the original engineers’ estimate was changed to favour the bid-winner, China Harbour Engineering Corporation Ltd (CHEC). Deputy Project Director P. D. Sooriyabandara was summoned separately.
The Commission recently took over several files related to the bid, authoritative RDA sources said. The probe was initiated amidst heightened Highways Ministry efforts to sign the direct agreement and concession agreement with CHEC.
Under the terms of the design, build, finance, operate, maintain and transfer (DBFOMT) project, the RDA expects to make a semi-annuity payment of US$ 54mn (Rs 19bn at prevailing rates) for 15 years starting from the commercial operation date.
A semi-annuity payment is a fixed fee every six months and the CHEC will recover its “investment” through this mechanism. The project is likely to receive 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 of 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 “tough conditions” were included to eliminate five prequalified bidders.
They also maintain that officials bent backward to accommodate CHEC 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.
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