China's MCC rejects slashed price of Sri Lanka highway contract
Oct 15, 2015 13:54 PM GMT+0530 | 1 Comment(s)
ECONOMYNEXT – Sri Lanka’s government said it would only achieve less than half the anticipated cost reduction by reducing the scope of work of an expressway around the capital Colombo after Chinese contractors refused to comply with all the changes asked for.
The project in dispute is phase three of the Outer Circular Highway (OCH) covering 9.32 kilometres from Kerawalapitiya to Kadawatha meant to divert traffic away from the city centre.
The contract was awarded to Metallurgical Corporation of China (MCC) at a cost of 66.7 billion rupees in 2013, government spokesman Health Minister Rajitha Senaratne told a news conference.
Considering its high cost and recommendations of a review committee of professionals, Sri Lanka’s new government elected in January wanted to change the scope of work and reduce cost by 35.9 percent or 23.9 billion rupees.
But MCC, the Chinese embassy and Exim Bank of China which funded the OCH project were not agreeable to the proposed changes.
The Ministry of Highways said the dispute was delaying an Exim Bank advance payment of 67 billion rupees which in turn was delaying the start of work.
This could result in additional payments to the contractor and consultant for construction supervision as both have already mobilised for the job for which additional local funds would be needed.
Senaratne said a team of consultants including international experts reviewed the scope of work and recommended changes which are absolutely necessary without compromising safety.
The Chinese firm had now agreed to remove an interchange proposed to be built at the Peliyagoda – Puttalam road as an interchange is already being built at Kerawalapitiya which is close to the Peliyagoda –Puttalam Road.
MCC also agreed to build only the inner four lanes of the expressway, instead of six as originally proposed, as the first two phases of OCH already completed have only four lanes.
These changes result in savings of almost 15 percent of the project cost or almost 10 billion rupees, less than half that had been anticipated originally which had also called for reducing the height and length of viaducts.