Cabinet approves Rs. 137 b Central Expressway section for local contractors

• Contract awarded for sums higher than what was initially estimated by State engineers
• Govt. defends higher cost as due to extra interchanges, rail overpasses and viaducts  
• Average cost of each kilometre Rs. 3.49 billion
• Govt. questioned on opaque tenders and accepting only one bid for each of the four parts of Section II

By Uditha Jayasinghe 

Cabinet yesterday approved allocating Section II of the Central Expressway section from Meerigama to Kurunegala to local contractors at a cost of Rs. 137 billion but declined to explain why only one bid was received for each section or to respond to queries of opaque tender procedures.

The cost for the section, spanning 39.29 km, ran into a dispute as bidders sent in contract packages that were 18%-20% higher than the estimate given by the State engineer, the Cabinet paper submitted by Highways and Higher Education Minister Lakshman Kiriella showed. 

However, despite the higher cost the Government did not allow for competitive bidding through open tenders but instead only received one bid for each of the four parts Section II was divided into.  

“The Cabinet Appointed Negotiating Committee after having considered the recommendations of the Procurement Committee and the outcome of the negotiations with the bidders decided to recommend for the approval of the Cabinet that the respective contract packages be awarded to the respective consortium of contractors which has submitted the bid for the relevant package at the corresponding negotiated bid price,” the Cabinet paper noted. 

It also goes on to say that “only one bid was received for each contract package” and therefore an appeal procedure would not be applicable. 

The Government engineers’ initial estimate of Rs. 126.8 billion without VAT was later negotiated up by the Cabinet Appointed Negotiation Committee (CANC) to Rs. 137 billion excluding VAT, which is an 8.05% increase, documents seen by the Daily FT said. Cabinet spokesman Dr. Rajitha Senaratne argued that the revision had to be made as none of the bidders were willing to meet the Government’s estimate. 

“The procurement committee and the CANC had several rounds of discussions to sort out this issue. The private sector has always asked to have access to these large scale projects and they were never allowed under the previous Government. Now we have given them this chance,” he disputed.       

When reporters raised questions about the other sections of the Central Expressway Dr. Senaratne brushed them aside by promising to ask Highways Minister Lakshman Kiriella to attend the Cabinet briefing next week to respond to concerns.  

Local media had earlier reported the Government is in talks with China’s Exim Bank to fund Section I of the Central Expressway, which the contractor, the Metallurgical Construction Company (MCC) of China, has now priced at Rs. 158 billion or Rs. 12 billion more than was originally stated. MCC has been awarded the contract without a tender.

Section I runs 37.1 km from Kadawatha to Mirigama. At the current price, this translates to nearly Rs. 4.3 billion per km. the Government has also run into fresh controversy over its decision to prelist Japanese companies allegedly with the support of the Japanese embassy for the 32.5 km Section III of the Central Expressway from Pothuhera to Galagedara in Kandy.       

Under the latest Cabinet decision the entire length of Section II has been broken into four sections named Package A, B, C and D. Package A (9.71km) has been given to the International Construction Consortium (ICC), Access and a joint venture with Nawaloka and Kdesh for Rs. 34.1 billion. Package B (10.20 km) has been parcelled off to Sierra, Olympus, Tudawe Brothers and Consulting Engineers and Contractors (CEC) for Rs. 34.5 billion. Package C was given to K.D.A Weerasinghe and Co. (KDAW), NEM Construction, and the lesser known E&C at a cost of Rs. 32 billion. 

Package D, despite having the shortest span of 8.5km, was given to MAGA Engineering, CML-MTD Construction, along with V. V. Karunaratne & Co and Hoveal Construction for Rs. 36.2 billion. 

Under this allocation, each kilometre in Package A will cost Rs. 3.52 billion, which is an increase of 8.22% from the initial price estimate. Each kilometre in Package B will cost Rs. 3.39 billion, which is a 7.94% increase and Package C will cost Rs. 2.94 billion per kilometre, a 7.8% increase from the initial estimate given by the State engineers. Package D has the highest cost of Rs. 4.27 billion per kilometre and is a 8.21% increase from the initial forecast. On average, each kilometre of Section II will cost Rs. 3.49 billion. 

The Cabinet spokesman defended the price increases saying they were due to design changes made from the initial drawing done during the tenure of the previous Government. 

The Cabinet paper submitted by Kiriella noted that the “cost of a kilometre is different from package to package due to the additional cost for construction of interchanges, railway overpasses and operational areas and due to different lengths of viaducts.” 

Package A has one interchange and a 2.11 km-long viaduct, Package B two interchanges and a 1.77 km-long viaduct and Package C is a 0.56 km viaduct. Package D will have two interchanges, one railway overpass, one operational area and a 2.35 km-long viaduct.