Sunday Observer Online


Sunday, 22 March 2015





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Government Gazette

'Mega projects: Review should be concluded speedily'

In fairness to contractors, if work on mega projects is suspended, as has been proposed by the Government, re-mobilisation of the project will be a costly exercise. Thus, it would be in the best interests of both parties to ensure that the review process is concluded speedily and efficiently, Chamber of Construction Industry, Sri Lanka, President Dr. Surath Wickramasinghe said in a letter to the Government.

Extracts from the letter.

CCI President Dr. Surath Wickramasinghe

"The Chamber of Construction Industry, Sri Lanka (CCI), is the apex body of the construction industry. We submit the following regarding the current status of the construction industry in Sri Lanka, in particular, the move by the Government to review the procurement process followed in connection with several ongoing, awarded and proposed construction projects.

While reviewing the procurement processes followed in connection with Government awarded projects, the preservation of the business confidence which Sri Lanka has so far achieved, with foreign and local investors, is important.

Taking a cue, from the Government's 100-day program, the impact to the construction industry, and the sector as a whole should be carefully examined during the aforesaid review process. There must be a fast track review, and the least sensitive projects should be allowed to proceed, especially those projects that have been awarded to local developers and contractors, either exclusively or with Government agencies and foreign partners.

Reviews are to continue for the Colombo Port City Project, funded by the Chinese Developers, the Mixed Development Project by the Indian Developers Tata, and two other projects - the Southern Expressway extention from Matara to Belliatta, and the much needed Northern Expressway, which is funded to some extent by the local banks and a sizable portion of the construction work was undertaken by local contractors, have also been stopped for review.

Comprehensive report

This type of action will no doubt affect the business confidence of developers, local and foreign. In respect of the Colombo Port City project, we understand that there are four compliances to be adhered. These being, EIA and IEE for the project, (hydraulic landfill and protection of the city), sand mining for the project, archaeological impact assessment and finally the master plan and infrastructure.

The first of these has been done and approved by the Coast Conservation and Coastal Resources Department (CC and CRMD). The second has been done and awaiting approval from CEA after which

the Geological Survey and Mines Bureau (GSMB) will grant the permit for mining. The third the Archaeological Impact Assessment has been carried out by the Archaeological Department itself.

The fourth is for the master plan and Port City infrastructure which will be implemented when the detailed master plan, is obtained from the consultants for the project, in around a month's time and the UDA will be the approving agency.

We are told that there is a school of thought that all these approvals should be in one comprehensive report. If that is the stance of the government it is best for the government to request the developer to prepare a single report at the earliest, including references to the shortcomings highlighted in the media.

Similar filling had been done already for the Colombo South Harbour (greater than that of the Port City in size) and in countries such as Singapore, where almost one third the country is on reclaimed land and large scale reclamation has been done in Japan, the Maldives, the Emirates and Oman.

In fairness to the contractors, if work is suspended as has been proposed by the Government, re-mobilisation of the project will be a costly exercise. Thus, it would be in the best interests of both parties to ensure that the review process is concluded speedily and efficiently.

When foreign funded projects are being reviewed, issues concerning the legality of freehold and lease hold transfers of land in favour of the foreign entities and persons should be carefully considered. From the perspective of the local industry, promotion of local entrepreneur participation at every stage of the project would be ideal.

Import of human resources should be discouraged as far as possible to promote local recruitment, especially in areas where local talent and expertise is available.

A few days ago, a journalist of an international magazine from the UK, interviewed and questioned me regarding the current issues concerning the ongoing projects in Sri Lanka, and whether Sri Lanka is a stable economy for British businessmen to invest.

The response given was that the prevailing uncertainty is temporary and the aim of the Government is to initiate a more transparent system that would in fact be a boost to investor confidence.

The view was also expressed that after ending the three-decade civil war, Sri Lanka has a huge potential to be the new growth hub in Asia.

However, in response, the journalist from the said magazine questioned the reason for the Sri Lankan Government taking unilateral action against investors (for example the unilateral suspension of the Port City Project without a fair hearing) without any negotiation, compromise or discussion. My response to same was that a dialogue would have been favourable.

The Government must be sensitive towards such views expressed by outsiders, and the impact on the industry as a result of such unilateral action.

If the present scenario continues for the next few months, signals will go to potential investors, foreign and local, cautioning them from investing in Sri Lanka. This is a serious matter not only for the construction industry, but, also for the economy.

Therefore, it is crucial that the Government makes a clear policy statement concerning its decision to review ongoing projects, what the it aims to achieve, what mechanisms will be put in place to ensure that the review processes should be transparent and fair and whether the Government would continue to honour contractual obligations.

In which event, the CCI would advise the Government, that all formal contracts being legal, such contracts should be adhered as per the agreements. We are prepared to assist the Government, in any way possible as there is an abundance of expertise available at the CCI."

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