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Chinese company pushes for elevated highway project, but Ministry Secretary expresses reservations
View(s):The Chinese company selected for the construction of the proposed elevated highway from New Kelani Bridge to Athurugiriya has notified Highways Minister Bandula Gunawardena that it had allocated “substantial resources to get to the current level” and wishes to swiftly implement the project in accordance with its agreement with the Government of Sri Lanka.
But the contract’s award to China Habour Engineering Company Ltd (CHEC) is mired in controversy. In November last year, the two most senior officers of the Road Development Authority’s (RDA) relevant project management unit (PMU) were summoned to the Bribery Commission. Among other things, PMU Chief K Selvanathan was required to explain how the original engineers’ estimate was changed to favour bid-winner, CHEC.
This week, CHEC wrote to Minister Gunawardane requesting the renewal of its registration for the project. (For this, the RDA must complete a formality on behalf of CHEC with the Registrar of Companies). The company reminded the Minister that its proposal was submitted in February 2021 after which CHEC was selected as the preferred bidder. A letter of intent was signed in November that year.
“We understand that the finalisation of the project documents has reached its closing stage pursuant to addressing the comments issued by the office of the Honourable Attorney General of Sri Lanka in September 2022 and execute [SIC] the relevant Project documents (‘Transaction Documents’),” the letter states, urging that it be implemented fast. CHEC has sought the Minister’s intervention in the renewal of its registration.
Transport and Highways Minister Secretary M.M.P.K. Mayadunne–who took over from longtime Secretary R.W.R. Pemasiri in December–says the agreement for the elevated highway is yet to be signed. There was no indication of it being expedited.
CHEC has proposed a design, build, finance, operate, maintain and transfer (DBFOMT) project under which the RDA is expected to make a semi-annuity payment of US$ 54mn (Rs 19.7bn 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 hopes to recover its “investment” through this mechanism.
Mr. Mayadunne said, however, that he will first prepare a comprehensive transport policy and roadmap after which projects will be allocated on a priority basis as public-private partnerships, build-operate-own or build-operate and transfer contracts. Sri Lanka had no more room for borrowing. If any unsolicited proposals were made, he vowed, expressions of interest will be published for the same projects so that other parties could participate.
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