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Sri Lanka re-negotiating high cost road deals to bring down costs: Ministers

COLOMBO (EconomyNext) – Sri Lanka is reviewing infrastructure deals awarded during the Rajapaksa administration mostly without competitive tendering and is hopeful of bringing the cost down amid falling material prices, ministers said.

Highways Minister Kabir Hashim said the third phase of a ring road around Sri Lanka’s capital Colombo (Outer Circular Highway Phase 3) awarded to a Chinese company was one of the projects that was being negotiated.

Many of Sri Lanka’s highways, except those funded by the World Bank and Asian Development Bank have been awarded without competitive bidding, and may also be overdesigned to charge higher prices.

In the case of OCH-3 Sri Lanka was also looking to reduce the ‘scope of work’ in a bid to bring the down price, he said.

Hashim said when contracts were signed by the last regime it was difficult to terminate the deals.

"We have to preserve relations with China and also deal with other challenges that work was being stopped," he told reporters.

"But we are not stopping work where contracts have been signed."

In some cases road were apparently being built without proper documentation. In some cases contractors have been given money ahead of work being completed.

In other cases contractors were given the go ahead by the Road Development Authority apparently before cabinet approval was given, Deputy Highways and Investment Minister Eran Wickramaratne said.

With the US dollars rising and commodity prices coming down bitumen and cement prices have come down.





Though there are cost escalation clauses in construction contracts there appeared to be no clauses to bring the cost down when prices came down, Hashim said.

He said a committee was reviewing all infrastructure deals.

But the highways ministry was facing an uphill struggle because many officials of the Road Development Authority who were involved in the deals were not giving documents or information and the new administration had to find the truth before documents disappeared.

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