Push for Central Expressway Project with higher cost
A contract to award part of the Central Expressway Project’s (CEP III) third section to a local consortium at a price higher by US$ 822mn (Rs 166.4bn) than its competing bid is to be pushed through Cabinet in the coming weeks.
The offer from a recently formed local consortium named LIDC to build the CEP III stretch (Rambukkana-Galagedara) has the backing of Highways Minister Johnston Fernando, construction industry sources said. But the bid is priced at US$ 1.87bn (Rs 378bn) which is significantly higher than the offer made by China’s Metallurgical Corporation of China (MCC) at US$ 1.05bn (Rs 212bn).
Lobbying has spilled into the public domain with key documents, including Cabinet papers, being leaked. MCC’s parent company – MCC International
Incorporation Ltd – recently mounted a direct appeal to President Gotabaya Rajapaksa, identifying what it claimed were irregularities in the manner LIDC was selected for the project. It said there had been just two bids of which MCC’s was the only foreign offer.
“We MCCI have now reliably understood that when it came to opening of the Financial Proposals, only the Financial Proposal of the Local Consortium, LIDC was opened,” said its letter, which has been widely circulated.
“It is customary in a democratic procurement evaluation either open both offers or reject the single offer as examination of just one offer does not facilitate price comparison,” it adds, hinting at bid-rigging.
MCCI warns that if projects have high and unrealistic costs, there is “likelihood for people to question the cost-benefit of infrastructure development”.
Also leaked is a Cabinet paper presented on Jan 16 by Minister Fernando in which he recommends that the original tender process be “terminated and canceled” on the basis that finalisation of foreign concession agreements and financing will get delayed. The same memo maintains that the relevant section of CEP III can be built with Rs 82bn.
Later, on Jan 17, he presented another Cabinet paper recommending that the original tender process be proceeded with. Neither the Highways Ministry nor the Finance Ministry has explained why the more expensive bid was selected – and that, too, without consideration of the financial bid of MCC.