China gives with one hand; takes away with the other
Government will go ahead with the KurunegalaHabarana Railway line project entertaining an unsolicited an Chinese bid for the construction work, a major shift from its widely-proclaimed competitive bidding policy.
Under the 5-year plan of ' Let's Awaken Polonnaruwa' District Development Programme (2016-2020), the project for the construction of a rail track from Kurunegala to Habarana via Dambulla, 80 km in length has been identified as a priority, Transport Ministry Cabinet Memorandum revealed.
China has agreed to contribute to the implementation of this project and therefore the proposal made by Transport Minister Nimal Siripala de Silva, to appoint a project team for speedy action to complete the project and acquire the lands required for the identified trace of the rail track was approved by the Cabinet earlier this year.
The Transport Ministry has entertained the construction contract proposal with a revised bill of quantity amounting to US$959.89 million submitted by the China State Construction Engineering Corporation Ltd (CSCEC).
This tender is to be awarded to CSECE in an unsolicited bid of around Rs.1 billion ignoring the government's good governance pledge of sticking to proper tender procedures, Business Times reliably learns.
The proposed 84-km KurunegalaHabarana railway line will run across the commercial towns of Dambulla and Sigiriya in the North Central Province.
Such a massive railway line construction project should be implemented in a phased out manner and the handing over the whole 5- year project contract (Design and Build) to a Chinese company without a competitive bidding pro- cess is unacceptable, a senior engineering consultant who wished to remain anonymous told the Business Times.
He noted that CSCEC's project proposal should have been evaluated by a technical committee of experts without accepting half-baked solutions.
Convenient transport
Government plans to implement this project come under the 5-year "Let's Awaken Polonnaruwa" District Development Programme 2016-2020.
Construction of the rail track from Kurunegala to Habarana via Dambulla has been identified as an essential and prominent task under this programme.
This project expects to provide convenient transportation for people in Eastern and North Central Provinces and to achieve provincial development by connecting Dambulla Economic Centre with the railway network.
But the return on this massive investment is not substantial because the country's railways operate as a state service not as a profitable venture, the senior engineering consultant pointed out adding that the issue here is the financial viability of the project in the long run.
The current investment on all the railway lines so far constructed is enormous since these are based on commercial loan facilities, he said expressing fear that it will be a huge burden on the country's economy.
The trace runs almost parallel and on the side of A6 highway and is designed to operate trains at 100-120 kmph. The proposed railway trace should be evaluated in terms of engineering, economy, environmental and social aspects, he said.
However promoters of the project are pushing it as a President's initiative for their petty personnel gains without considering the government's development priorities, he disclosed.
Protesting against the involvement of the Chinese company, Convener of Railway Trade Union Alliance, S.P.Vithanage told the Business Times this proposal was made some time back to implement in stages with the deployment of Sri Lanka Railway Department engineers and workers without seeking foreign loans or foreign assistance.
Local engineers ignored
This railway line could be turned out by local engineers and workers of Sri Lanka Railways at much lower costs like they reconstructed the railway line devastated in the 2004 Tsunami , he said.
Sri Lanka Railway's exceptional reconstruction work of the Tsunami devastated coastal railway was completed in 56 days at a cost of less than Rs. 450 million in 2005, he pointed out adding that the Department has manpower and other necessary resources to carry out this massive task.
The Central Engineering Consultancy Bureau (CECB) has completed the pre-feasibility study of the project and the preliminary survey of the proposed rail track line has been launched by the Survey Department in 2004.
The estimated cost of the project at that time was US$ 225 million and it was scheduled to be completed by year 2016. However this didn't materialise.
In 2013, former Minister Basil Rajapaksa ordered the officials to accelerate the preparatory work to build the railway line from Kurunegala to Habarana.
When contacted this week, Minister Nimal Siripala de Silva told the Business Times that the rail track would be constructed as a priority project via Dambulla and Galewela.
Loan from China
Defending the decision on an unsolicited bid, the Minister said that when projects come with a Chinese loan the government is obliged to give the contract to a Chinese company. The project is being funded through an EXIM Bank China loan.
He noted that it is aimed to minimise the traffic congestion on KurunegalaDambulla road, transport agriculture harvest easily and minimise delays on the Colombo-Batticaloa/Trincomalee rail track.
When asked to comment on the feasibility of the project, former Transport Ministry Secretary and economist Dr. Lalithasiri Gunaruwan told the Business Times that there is no urgency in implementing this railway project as the return on investment and economic benefits are minimal.
He said that this proposal was there for long time and it was proposed to implement using Railway Department manpower, engineering expertise and other necessary resources with government funding, stage by stage.
Vehemently rejecting the entertaining of unsolicited bids for railway line construction contracts , he noted that what the government should do is to allow local engineers and enterprises to design and implement projects to the maximum possible extent, or resort to international competitive bidding whenever procurement from abroad becomes unavoidable and call bids together with that of supplier country bilateral credit terms whenever the Government of Sri Lanka finds shortage in capital funds and when multilateral soft loans are not available.
Replying to a question raised on the high quotation made by the Chinese company, Dr. Gunaruwan noted that what the China has done in this instance was similar to give with one hand and take away with the other.
Sri Lanka is expecting to get $1 billion upfront from the sale of an 80 per cent stake in the Southern Hambantota port from China and repay the same amount to the Chinese company for the construction of the Kurunegala- Habarana Railway line, he said.