A David vs Goliath battle to build houses for war displaced in NE

Global steelmaker giant here to lobby for project amidst opposition from homegrown civil society group with cheaper alternative

ArcelorMittal, the world’s largest steelmaker, sent a team to Sri Lanka last week to continue lobbying the Government for a lucrative US$1 billion project to build 65,000 houses for war-displaced in the North and East.

But the company is facing competition from a civil society group that has put forward an alternative proposal to build the same number of houses at a fraction of the cost. Additionally, funds for the project would be borrowed locally in contrast to the steelmaker’s plans to secure expensive dollar loans.

Both proposals have now been studied by a committee. Charitha Ratwatte, Special Adviser to the Prime Minister and a committee member, said their report has already been sent up. “A technical report has been given with our comments,” he told the Sunday Times, refusing to divulge details.

The alternative proposal was drawn up by a multidisciplinary group from Colombo and Jaffna with expertise in engineering, architecture, planning, community housing, finance, economics, law, community organisation, project management and so on. It envisages the construction of 65,000 masonry houses of 550 square feet each (including a toilet) at Rs. 800,000 per house.

A water tank, rainwater harvesting structure and electricity connection could be installed for an additional Rs. 43,000 per house. Where households had no connection to the current grid, a solar electrification system would be provided.

“It costs half the amount for a masonry house,” remarked M.A. Sumanthiran, Jaffna District Tamil National Alliance MP. “I conducted some consultations with women’s groups in Jaffna and I asked for their preference. They said not to oppose the project and have it stopped but that if we can change it into a masonry house, please do it.”

ArcelorMittal’s prefabricated steel units cost Rs. 2.81 million each without taxes. The company’s quoted prices will cost the Government a total of US$1 billion for the houses, not counting interest payments on the loans to be obtained for implementation. The Ministry of Rehabilitation and Resettlement, which is pushing for the project to be awarded to ArcelorMittal, justifies the sum saying it includes a large number of amenities such pantry cupboards, gas cooker and cylinder, sink, cooking utensils, dining table with chairs, TV with stand, pedestal fan and a laptop computer with WIFI facility.

But the proposal to award the project to ArcelorMittal has been opposed by civil society organizations on the grounds that the houses are too expensive and, being prefabricated, do not add value to the local economy in North and East where they are to be built.

“Sri Lanka just signed an International Monetary Fund (IMF) agreement last month with many conditions that are going to effect the economic situation of the local people, from increases in taxes, price hikes for State-owned services such as electricity, lower wages and less protections for workers with trade liberalisation,” said Ahilan Kadirgamar, a political economist based in the North. “The reason for the IMF agreement was an economic crisis, mainly with falling foreign exchange reserves due to our increased import bill and falling exports.”

“So, the ArcelorMittal project where we will purchase houses worth US$ 1 billion from a French company is ridiculous,” he criticised. “It is these kinds of decisions to take massive foreign exchange loans which will cause another major crisis in the next few years.”

“I urge the Government to go with the alternative proposal,” Mr Sumanthiran said. “People desperately want houses but all, without exception, would prefer masonry houses to prefabricated steel ones. So when you can get that, built in the same time for half the cost, obviously that’s the one the Government must go for.”