National highways: The true story

By. R.W. Ranjith Pemasiri

Multilateral and bilateral convention donors offer around US$ 200 m to US$300 m per annum for the highways sector in compliance with its eligibility and procurement guidelines.

However, the funding provisions are not sufficient to carry out a large scale accelerated development program.

The predicament is whether we should open up other avenues to obtain funding with appropriate regulatory measures to achieve the development targets or we should confine to the limited funding from conventional donors and thus achieve a slow growth in development in highways? The obvious choice is to look for new funding arrangements to fast-track the Highway Development process which has a positive impact on other economic sectors for a faster national development and growth.

The recent articles in the newspapers have attempted to suggest that the expressways constructed in the country are expensive compared to those constructed elsewhere in the world and that the procurement of contracts are through stand-alone proposals associated with lack of competition and at a huge cost.

This response is meant to correct the misleading statements 'dished out' to readers of newspapers without giving the true picture of the highway and expressway development, with correct facts and figures.

The expressways constructed in Sri Lanka were well planned, formulated, prioritised and implemented. Due to the prolonged 30 year

conflict the country fell back 50 years in all its development spheres. The government development agenda was to carry out an accelerated road development program to facilitate overall development in other economic sectors.

The planning and execution of rehabilitation and development was not restricted only to national roads and expressways but also the rural roads. 7000 km of national roads have being rehabilitated already and developed upto national standards. The present network of national roads is 11800 km including some link roads taken over recently. The development of the national network of roads is planned and documented in the ten year road master plan, 2007-2017, titled National Road Master Plan (NRMP).

NRMP provides the program based prioritised plan to develop the network. This volume of the NRMP addresses the key issues in the highway sector, and proposed remedial action and implementation framework for the period 2008 to 2017. The proposed programs includes (a) program to reduce traffic congestion, (b) road upgrading and rehabilitation programs, (c) required legal and regulatory framework, (d) measures to expedite land acquisition and thereby speed up project implementation process (e) strategies and implementation plans for strengthening the road agencies (f) program for new highway constructions to improve connectivity of different regions, (g) remedial actions for road construction material issues, (h) measures to strengthen the social and environmental safeguards, (i) financial implications and (j) proposed strategies for financing the ten year highway development program.

In broad terms, the NRMP will be the tool for future policy and strategy formulation and provide the framework for expeditious implementation of highway sector projects.

The implementation of NRMP would help the country to own the best connected, high mobility road network that will cater to the ever increasing needs. Besides the development of network of highways is complementary to the ongoing accelerated economic development program, which necessitates corollary activities from all sectors of the economy. Hence the total program will generate synergistic effects in a positive way helping the acceleration of economic growth, creation of productive employment and reduction of structural poverty in a most cost effective manner. Improved mobility helped by effective communication and transparency will also prove the presence of good governance.

The Expressway network was executed through a planned schedule. The Kottawa - Pinnaduwa (Galle) 4 lane Highway (95km) was constructed and opened for traffic on November 27th 2011. The Katunayake Expressway (26km) was constructed and opened on 27th October 2013. In the first section of the Outer Circular Highway, 11 km out of 29 km was opened on 8th March 2014.

The second section 8.9 km long, is scheduled to be completed in June 2015. The extension of the Southern Expressway from Galle - Pinnaduwa -Godagama, Matara was completed and put to use on 15th March 2014.

All these were not 'Stand alone' proposals. The Southern Expressway from Kottawa - Pinnaduwa was procured as three contract packages on a basis of competitive bidding. The Outer Circular Highway's 1st section and the 2nd section were procured through competitive bidding. The critics have attempted to mislead the newspaper readers as by implying that all the expressways constructed were through stand-alone proposals.

With the eradication of terrorism which had retarded the development process for nearly three decades and the consequent establishment of peace, the government initiated an accelerated infrastructure development program to facilitate rapid economic and social development to uplift the living standards of the citizens.

The mobilisation of funds through conventional lending agencies involves a long process and Sri Lanka with the attainment of the status of a middle income country was no longer eligible for concessionary loans.

Under this scenario, with the expansion of bilateral lending arrangements through export credit agencies of emerging economies where each lender has its own procurement system and where lending governments or agencies nominate their contractors, implementing large-scale infrastructure projects through 'Stand alone' proposals became a viable alternative. In this context, world's largest emerging economy, the people's Republic of China offered us credit with the eligibility and procurement guidelines which we found to be a viable alternative, to secure funds for large scale infrastructure projects. In our case the Government of China accepted all our proposals and agreed to grant the credit facilities complying with the China Exim Bank and the Sri Lanka Government regulations for the projects in hand.

The government in 2011 introduced procurement guidelines to cater to procurement of such 'Stand alone' proposals through a process which is both expeditious and transparent, for the implementation of large scale projects which would be exceptionally beneficial to the country and the people with due review through high level committees.

It should be noted that all expressway projects awarded on the basis of 'Stand alone' proposals have been procured through a process in accordance with the above mentioned guidelines.

The comparison of cost between the expressways in Sri Lanka with

that of other countries is inappropriate for several reasons. When conditions are not similar, comparisons are unrealistic.

However the engineers would like to select the traces that yield minimum cost of construction, the possibility of environmental and social impact may be high. In order to reduce the social impact due to displacement of people, almost all the traces in which expressways were constructed or being constructed, run through marshy lands.

Those traces run through areas of 'Soft' soils, such as peat which need expensive treatment for stabilisation. Even otherwise construction costs are higher than on the normal ground. In the case of CKE (Colombo - Katunayake), the trace covers the entire Muthurajawela marshy lands.

The STDP, Southern Transport Development Project (STDP) and the Outer Circular Highway (OCH) are also similar. The critical writers compare the expressways in India and state that it varies between US$2 to 8 million per km. This is Rs. 260 million - Rs. 1050 million. In India labour wages are cheap.

The unskilled labour is Ind. Rs. 100-150 per day, material such as rock aggregate is cheap at Rs. 375-600 per m3 and also the soil. The cost of unskilled labour in Sri Lanka is Rs. 1000-1500 per day, rock aggregate Rs.1600-2500 per/m3, and the soil when brought to site is Rs. 1000-1500/m3. The prices of bitumen, cement and steel are equally high.

Therefore the cost of construction is inevitably high.

In India most of the roads cut across sparsely populated and flat terrain, with less water crossings. The human settlement in India are discreetly placed when compared with Sri Lanka.

It is also noted that in India the number of crossings going via expressways are less than that of Sri Lanka. Though our country is small we have densely spread waterways requiring numerous bridges and culverts. For example the 26km CKE (Colombo - Katunayake Expressway) has 42 bridges and 106 box and pipe culverts and a 1300 m long viaduct.

The benefit of expressways in order to increase mobility need not be over emphasized. The ribbon development along the national network of road is extremely high. No matter how much these are improved, the average speed cannot be increased appreciably. Presently it is around 38 km/hour or less, with the increase of traffic this too has become less and in urban areas this is as low as 10-20 km/hr.

The completed expressways have yielded very high travel time savings. Kottawa - Galle is in the range of 1 hr/trip, Kottawa - Matara is in the range of 1 1/2 hrs/ trip. Colombo - Katunayake is around 30 min/trip. The present traffic volume is much higher than it was predicted. Ex. STDP 18,500 v.p.d against 9000 v.p.d, CKE 18,000 v.p.d against 12,000 v.p.d. The total revenue generated from the two Expressways up to date is Rs 6250 million.

The initial feasibility study envisages recovering construction and operation and maintenance costs within a 30-year period. The toll rates are worked out on that basis. The present situation of higher number of v.p.d, and the toll based on lower volume of traffic cannot yield loss as stated in the newspaper articles. In fact its income is over and above the predicted figures.

The usage of Southern Transport Development Project (STDP) by all categories of vehicles, since the commencement of operation is shown below (table 05)

The saving on travel time, fuel usage and vehicle operating cost is very significant. The full benefit accrued due to travel time savings, lower vehicle operating cost will not materialise overnight and takes a long time. There are corollary effects in overall development due to improved road infrastructure in almost all sectors such as industry, tourism, fisheries, agriculture etc and strengthening good governance by way of improved communication.

It is unfortunate that attempts have been made to devalue the very positive, timely and appropriate development work which is carried out on an accelerated phase which no one would have ever imagined 10 years ago. Let us rally round and recognise the positive timely development work aimed towards the upliftment of living standards of all citizens of Sri Lanka without resorting to misleading theories and statistics.The cost of construction of expressways and highways depend on the topographical and geographical considerations of the road trace such as good or poor sub soil conditions, volume of rock excavations etc. and the number of bridges, culverts, flyovers and the under passes.

Other technical aspects such as the number of lanes and the number of interchanges also have an effect on the total cost.

The cost will also depend on whether the facilities are constructed in densely populated or sparsely populated areas and the efforts made to minimize the adverse social and environmental impacts. However the comparisons referred to in the illustrative article do not take such variations into account.

To avoid displacement of people due to the construction of expressways which is kept to a minimum, the road traces have been shifted to marshy areas in several locations. Also, in order to mitigate adverse environmental impact due to construction of expressways in marshy areas, long viaducts are introduced in the design.

It should also be noted that Sri Lanka is blessed with a large number of rivers and tributaries, the number of bridges and culverts necessary to be constructed are high. All these contribute to the increase in cost of expressways and highways in Sri Lanka.

Therefore a realistic comparison in the cost of construction of projects within or outside the country should also take into account all such factors making allowance for escalation of prices that may occur or have occurred.

Based on the revenue generated from the Southern Expressway, the

first set of newspaper articles attempted point a picture that the RDA has incurred a financial loss in 2013. If the logic of this argument is extended to the non fee levying national highway network, then it follows that the RDA is perennially incurring a whopping annual loss calculated at the annual total cost of rehabilitation, maintenance and debt service cost of the network.

No road project will give a financial return immediately. Most of the projects are financially not viable, but are economically viable. It will take longer time to justify the investment, risk and the trouble.

This is the case all over the world. The economic rate of return of the investment on a highway network of the country is calculated on a more complex analysis of cost and benefit, arising, inter alia, on saving on time, savings in vehicle operating costs etc and indirect benefits derived through contributions made to the economic development of the country.

It should be noted that feasibility studies which evaluate the costs and benefits are always carried out for all large scale projects such as construction of expressways and the projects are selected for implementation, only if such studies show that the potential economic rates of return exceed minimum accepted threshold values.

The writer is the Secretary to the Ministry of Highways, Ports and Shipping and the Acting Chairman of the Road Development Authority.