COLOMBO (EconomyNext) – A Sri Lankan transport expert has revealed how crooked politicians and contractors connived to "wilfully" dismantle normal procedures and inflate costs of highway projects, mostly Chinese funded and built, that could be done at half the cost.
Calling it an attempted "highway robbery", Amal Kumarage, a senior professor in the Department of Transport & Logistics Management at the University of Moratuwa, called for better controls to prevent such attempted plunder in future.
The country should take steps to "clear the stables of the many players that aided and abetted this attempted national plunder so that the restored highway programmes can be protected and made productive," he said in a report published by the Sunday Times newspaper.
Voters who ousted for president Mahinda Rajapaksa at the January 8 presidential election were "not mistaken", Kumarage said, noting that they voted “no” to spending billions of rupees on grandiose and economically unproductive highway development.
The 197 km Northern Expressway Project (NEP) was to be the “crown jewel” in this highway robbery, Kumarage said. The extension of the Southern Highway up to Hambantota and the Outer Circular Phase III North of Kadawatha were others.
The attempted plunder of public money was made possible by selective ‘negotiation’ with international highway engineering consultants, bypassing established rules and procedures and secrecy that meant studies done without widespread discussions and feasibility reports yet to be made public.
The cost of a 42-km section of the four-lane proposed northern expressway between the towns of Mirigama to Mudalpolla was originally estimated at 35.7 billion rupees but soon turned into what Kumarage called "the biggest attempted public pillage in Sri Lanka to date."
The final NEP feasibility report under the ousted Rajapaksa regime estimates this same section’s cost to be 98.4 billion rupees just one year later and had been evaluated and accepted by the Road Development Authority’s Planning Division.
"Even after adjusting for toll gates, ICT technology and inflation for that year, it is evident that the new total cost was around 130 percent higher, Kumarage said.
"It is surprising that the consultants in these different feasibility studies had not applied international norms to examine the justification for these high costs. Neither is there a comparison with the earlier studies.
"However, a more serious ‘mistake’ appears in computation of benefits," Kumarage said.
"One of the studies shows 55 percent of the highway’s benefits to accrue from ‘savings from freight vehicle user time costs’.
"Usually, it is passenger time savings and vehicle operating costs that constitute the major portion of benefits. Such freight time savings is unprecedented even in highly industrialised countries which have heavy trucking operations. This casts serious doubts about the accuracy of the calculations."
Kumarage said that consequently, the benefits appear to be "overestimated by about 150 percent".
"This is why the project still shows on paper to be economically feasible. In reality, the actual performance of the project at the inflated price would have resulted in a negative rate of return that would have made the country poorer, not richer.
"It then makes sense why these feasibility studies were not made public and not submitted to the relevant divisions within the RDA for evaluation."
Kumarage said "timely action by an intelligent population thus prevented the country from spending 504 billion rupees for what should have cost only 217 billion rupees on the Northern Expressway Project alone."
The former regime had also approved contractor rates for material and work items in highway projects "well above market prices".
Other projects such as the extension of the Southern Highway and Outer Circular Phase III had similar "unexplained cost margins" which would have made the total "plunder of public funds" well over 400 billion rupees.
"We could have built all our highways for the price of one!"
Kumarage also called for action against those responsible for their attempted plunder and for tighter project approval procedures to prevent similar attempts "by the same players" under the new government.
More time should be given for better planning and design, he suggested., so highways are planned as integrated development projects where the new mobility can be effectively used by new industries that can use such comparative advantage from the time and transport costs.