A Government-led initiative to build 65,000 houses for the displaced in the North and East has run into controversy. Civil society groups are questioning the estimated cost of each house—a steep Rs. 2.1 million—and the “fast-track” process by which a builder was selected out of several bidders. The displaced will have no say over the [...]


Houses at Rs. 2 m. each for North-East displaced

Fast track process to select builder questionable, say civil society groups

A Government-led initiative to build 65,000 houses for the displaced in the North and East has run into controversy.

Civil society groups are questioning the estimated cost of each house—a steep Rs. 2.1 million—and the “fast-track” process by which a builder was selected out of several bidders. The displaced will have no say over the type of house they are to receive with little or no room for modification according to individual needs.

Waiting for a place they can call home. File pic of a displaced person

The design will be prearranged with the contractor. Each standard unit will be 520 square feet with a steel structure and prefabricated panels. The price is inclusive of a television set, some furniture and solar panels.

“Apart from the fact that the basis for this costing is unclear, it is also four times the amount in the Indian housing project and significantly more than all other housing programmes completed or currently underway,” said a statement by civil society organisations supported by experts and researchers.

It warned that the discrepancy will not only breed inequities and multiple standards, it will create tensions within communities.

Between 2013 and 2015, the Centre for Poverty Analysis (CEPA) conducted studies among beneficiaries of a housing project sponsored by the Swiss Agency for Development Cooperation.

This scheme paid Rs. 550,000 as a staggered grant to the displaced to build their houses. “In the first data set, only two households spent more than one million rupees while in the second data set only three households spent over one million rupees to build their houses,” said Vagisha Gunasekara, Senior Researcher at CEPA.

Civil society groups contend that if a good house could be built with a million rupees the difference could be better invested in livelihoods and other areas of necessity.

They also hold that constructing the houses domestically, rather than importing the structure and panels, would create jobs and help the local economy.

“During the post-war years, there has been a major fall in local incomes in fisheries and agriculture leading to massive indebtedness in the North and East,” said Ahilan Kadirgamar, a political economist in Jaffna.

“It is the various owner-driven housing schemes, including by the Indians and Swiss, which created demand for local labour in the form of masons and day wage labour.”

Mr. Kadirgamar said such incomes from housing construction in every village where houses were built were an important stimulus to the rural economy.

“The worry with 65,000 houses to be built with state finances but awarded to a foreign contractor is that this massive financing is going to do little to stimulate the local economy,” he observed.

“If these houses are prefabricated, then hundreds of millions of dollars that would have gone into the rural economy in the form of wages will only go to foreign labour and the foreign contractor as profits.”

“Furthermore, there is a major opportunity cost in terms of, for example, housing related small industries in roof tile making and carpentry workshops which would have been possible with a well-planned locally constructed housing scheme,” he said.

The Government shoots back, however, that in both the Indian housing scheme and the Swiss project beneficiaries fell into debt—around Rs. 650,000 in most cases, according to CEPA studies—in order to complete their houses.

This is why a “contractor-driven” approach was adopted over an “owner-driven” one, D.M. Swaminathan, Minister of Rehabilitation, Resettlement and Hindu Religious Affairs, told the Sunday Times.

“The owner-driven approach has been quite unsuccessful because people get into debt,” he said.

But research has proved that indebtedness in relation to housing programmes in the North and East has arisen because of “the absence of equitable and non-exploitative financing modality and other reasons, including a lack of secure and remunerative livelihoods,” the civil society statement says. “It is not a result of being owner-driven.”

“Rather than address these and other concerns with regard to recent housing programmes, a major policy shift in favour of contractors is being envisaged without sufficient explanation,” it observes.

There are worries, too, over the manner—particularly the rush—in which the contract was decided. Cabinet decided in September to build 65,000 houses for the North and East. Twelve days later, expressions of interest were invited via a notice published in newspapers.

The advertisement said interested parties should have the capability to raise concessionary financing arrangements and be able to complete the project in five years.

The houses were to have a living and dining room, two bedrooms, a kitchen and verandah. Around 35 submissions were handed in, twenty-four days after the publication of the advertisement. Fifteen parties were shortlisted.

The Ministry allowed 25 days for the submission of proposals. But it also changed the requirements—after expressions of interest were received and bidders shortlisted—from five to four years for the completion of the project.

At a pre-bid meeting, a majority of bidders requested an extension in order to lodge better proposals. However, the deadline was postponed by just three working days.

Eight proposals were submitted. Minister Swaminathan said the tender has not been awarded yet. But authoritative sources said ArcelorMittal, headquartered in Luxembourg, has won the bid.

“Around August, the Minister told us about the 65,000 houses and said a French company would be getting the contract,” said M.A. Sumanthiran, Tamil National Alliance Parliamentarian.

“So even back then it was known that this company would be doing it. That makes a mockery of the tender process. It makes it a sham.”

Arcelor (France, Spain, and Luxembourg) was taken over in 2006 by the Indian-owned multinational steel maker Mittal Steel, making it ArcelorMittal.

Its website said it is the world’s leading integrated steel and mining company. And it advertises prefabricated housing with steel structures, the like of which has not been seen in Sri Lanka before.

“They will be built to high international standards,” vowed Minister Swaminathan. “These houses will be among the best in the world.” He dismissed allegations that the project had been awarded with excessive speed.

“It was not done quickly,” he said. “It took three-and-a-half months. The tenders still have to close and the final party to be selected.”

The Minister also said beneficiaries will be chosen in consultation with the Government Agents of the respective districts. First priority will be given to the displaced. For now, however, these administrators remain ignorant of the details.

The Government Agents of Jaffna, Kilinochchi and Mullaitivu all said they had heard—that “some people” had told them—of the project but that they were yet to be officially notified.

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