ADB warns of cost increases in breakwater contract

The Asian Development Bank, which has undertaken to finance the construction of the breakwater for the new Colombo South Harbour, to the tune of US$ 300 million, has warned that any further delays in awarding the contract for it will impose significant cost over runs, which will have to be met by the country.

The Hyundai Corporation of South Korea won the tender for the construction of the breakwater, by quoting the lowest price of US$ 320 million late last year, but the Government could not award the contract as the ADB has stipulated that its funding of the project was dependent on the Government following an open competitive bidding procedure prior to awarding the contract to build the first terminal of the new harbour.

The Government awarded the contract to build the first terminal in early February to Hutchison of Hong Kong, even though it was only the second highest bidder.
President Mahinda Rajapaksa however cancelled the award soon after and announced the decision to call for fresh bids on the basis of a Cabinet decision to secure national interest in awarding tenders in future, thereby further delaying the awarding of the contract to build the breakwater.

So far there has been no calling of fresh bids for the terminal. ADB Country Director Richard Vokes told The Sunday Times that given this imbroglio there had been discussions between the Sri Lankan Government and the Bank to see if there is any way in which the breakwater contract can be awarded and work begun, while maintaining the overall integrity of the project, including the selection of the terminal operator following an open competitive bidding procedure.

He said options are being considered and would have to be agreed to by the Bank management and approved by its Board. (RA)