Mega pro­jects on hold

The al­ready de­layed 25,000 hous­ing con­tract for war dis­placed fur­ther de­layed

Sunday Times (Sri Lanka) - - FRONT PAGE - By Namini Wi­jedasa

Ne­go­ti­a­tions on or fi­nal­i­sa­tion of sev­eral of multi­bil­lion dol­lar pro­jects, pro­cure­ments and con­tracts are held up ow­ing to the on­go­ing power struggle, in­clud­ing an ini­tia­tive ef­fort to build houses for the war-dis­placed which is over­due since 2015.

Af­ter months of de­lay, a con­tract for 25,000 houses was to be signed in the first week of November be­tween the Govern­ment and a con­sor­tium of hu­man­i­tar­ian or­gan­i­sa­tions led by UN- Habi­tat and UNOPS. The dwellings were an al­ter­na­tive to a heav­ily- crit­i­cised at­tempt to in­tro­duce pre­fab­ri­cated steel houses to the war dis­placed in the North and East.

“We drafted the agree­ment, it went to the At­tor­ney Gen­eral’s Depart­ment for ver­i­fi­ca­tion of the me­moran­dum of un­der­stand­ing and we were hop­ing to have it signed in the first week of November,” said Roshan Mendis, Chief Ex­ec­u­tive Of­fi­cer (CEO) of Leads, a con­sor­tium part­ner.

Con­struc­tion of 15,000 houses was to be­gin be­fore the end of this year and be com­pleted in eight months. The rest were to be fin­ished in 2019. Also held up is an ef­fort fi­nanced by In­dia to build a fur­ther 28,000 houses in the North and East. Cabi­net re­cently sanc­tioned the Min­istry of Re­set­tle­ment to award the con­tract to ND En­ter­prises ( In­dia) and Sri Lankan part­ners Yapka De­vel­op­ers (Pvt) Ltd and Archedium (Pvt) Ltd.

Mean­while, the Mil­len­nium Chal­lenge Cor­po­ra­tion, which ap­proved a five-year grant of ap­prox­i­mately US$ 460mn for Sri Lanka’s land and trans­port sec­tors, said last week that, “No ac­tions are be­ing taken ei­ther to move the com­pact for­ward or to sus­pend it while we assess the sit­u­a­tion in coun­try.” The agree­ment was to have been signed in December this year fol­low­ing months of ap­praisal.

Many other pro­jects on which progress was re­ported over the past few months are held up due to the ad­min­is­tra­tive paral­y­sis caused by the po­lit­i­cal un­cer­tainty, pub­lic sec­tor sources said. For in­stance, work on a US$ 1.4bn loan from the Ja­pan In­ter­na­tional Co­op­er­a­tion Agency ( JICA) for a light rail project has also stopped due to de­lays on the bor­rower’s ( Sri Lanka Govern­ment) side.

No fur­ther dis­cus­sions on loans had been sched­uled at the time the po­lit­i­cal cri­sis erupted and noth­ing has been pen­cilled in since then, a spokesman for the Ex­ter­nal Re­sources Depart­ment ( ERD) of the Fi­nance Min­istry said. “We re­cently ne­go­ti­ated a loan with the ADB (Asian De­vel­op­ment Bank) and there are pend­ing ne­go­ti­a­tions with AIIB ( Asian In­fra­struc­ture In­vest­ment Bank) and JICA,” he said.

The AIIB mis­sion was due to ar­rive in Sri Lanka for talks on the Colombo Ur­ban Re­gen­er­a­tion Project-- which en­vis­ages land re­de­vel­op­ment and the build­ing of af­ford­able hous­ing for low- in­come com­mu­ni­ties. “They have not in­di­cated tim­ing of the visit yet,” the ERD source said.

The Nether­lands Em­bassy said, too, that there is “no de­ci­sion yet ei­ther to stop or carry on” on­go­ing Dutch-funded pro­jects. “We are watch­ing the de­vel­op­ing sit­u­a­tion,” a spokesman said.

Cabi­net re­cently ap­proved the award­ing of a con­tract to es­tab­lish a Euro 35mn na­tional vo­ca­tional train­ing in­sti­tute at Hin­gu­rak­goda to a Dutch com­pany. Also on the cards is the con­struc­tion of 200 ru­ral bridges, awarded to an­other en­tity from the Nether­lands for a sum of Euro 50.68mn.

Sev­eral Ger­man busi­nesses have also ap­plied for and re­ceived Cabi­net ap­proval for lo­cal pro­jects. The Ger­man Em­bassy in Sri Lanka said, while it can­not speak for pri­vate com­pa­nies, ef­fects on de­vel­op­ment co­op­er­a­tion “re­main to be seen”.

“How­ever, it is cru­cial to re­solve the cur­rent po­lit­i­cal cri­sis as soon as pos­si­ble in or­der to limit its neg­a­tive im­pact on Sri Lanka’s econ­omy and for­eign in­vest­ment,” a spokesper­son stressed. Among other things, Cabi­net has ap­proved the eval­u­a­tion of a pro­posal by a Ger­many com­pany to de­velop the ear, nose and throat fa­cil­i­ties in sev­eral hos­pi­tals.

The Euro­pean Union said there has been no im­pact so far on pro­jects funded by them, in re­sponse to a ques­tion from the Sun­day Times. But a state­ment by the EU Del­e­ga­tion in Colombo warned that any fur­ther de­lay in sum­mon­ing Par­lia­ment for a vote “could dam­age Sri Lanka’s in­ter­na­tional rep­u­ta­tion and de­ter in­vestors”.

“We con­sider it es­sen­tial that Par­lia­ment be al­lowed to demon­strate its con­fi­dence by vot­ing im­me­di­ately when re­con­vened, in or­der to re­solve the se­ri­ous un­cer­tain­ties cur­rently fac­ing the coun­try,” it said. “Re­spect by all stake­hold­ers for the pro­vi­sions of the con­sti­tu­tion will be im­por­tant to main­tain the con­fi­dence of the Sri Lankan peo­ple in demo­cratic gov­er­nance and the rule of law.”

The ADB said all loan ne­go­ti­a­tions for 2018 have been com­pleted. “There is no change in the ADB project line- up for 2019 or beyond,” a spokesper­son said. “ADB’s three- year rolling pipe­line for pro­jects for 2019- 2021 was pub­lished in Au­gust 2018. As is our prac­tice, ADB works with govern­ment to ad­just the pipe­line as nec­es­sary to re­spond to de­vel­op­ment pri­or­i­ties.”

The World Bank, which has nu­mer­ous pro­jects in the pipe­line, main­tained that it was an apo­lit­i­cal and non­par­ti­san de­vel­op­ment in­sti­tu­tion that has been in Sri Lanka since 1953. “The World Bank is com­mit­ted to end­ing poverty and pro­mot­ing shared pros­per­ity in our client coun­tries through tech­ni­cal sup­port. The govern­ment agen­cies are re­spon­si­ble for the im­ple­men­ta­tion of on­go­ing pro­jects and we will re­view progress as per planned mis­sion sched­ule. We do not spec­u­late on po­lit­i­cal de­vel­op­ments.”

Many other pro­jects on which progress was re­ported over the past few months are held up due to the ad­min­is­tra­tive paral­y­sis caused by the po­lit­i­cal un­cer­tainty, pub­lic sec­tor sources said. For in­stance, work on a US$ 1.4bn loan from the Ja­pan In­ter­na­tional Co­op­er­a­tion Agency (JICA) for a light rail project has also stopped due to de­lays on the bor­rower’s (Sri Lanka Govern­ment) side.

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