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Offer by Railways sidetracked; China gets huge signal contract
View(s):The Transport Ministry is set to award a US$ 15mn (Rs 2.2 billion) project to China National Machinery Import & Export Corporation (CNMIEC) to install signals at four stations on the new Matara-Beliatta line when the Railways Department’s own engineers offered to do the job for Rs 250 million.
No tenders were called. The basis for placing the project cost at US$15mn is not known. CNMIEC is the same company that was given the contract (as an unsolicited proposal) for extending the railway line from Matara to Beliatta.
It has now fallen so far behind schedule to complete the track that the Transport Ministry will grant it a second extension of the completion deadline to September 2017.
Work was due to have been finished by July 2016. But it is learnt that nearly 15 percent of the contract is yet to be fulfilled. This includes the building of stations. The cost of the 28km extension — financed through a loan from China Exim Bank — is US$ 280mn.
Multiple official sources confirmed to the Sunday Times that the Railway Department’s signals and telecommunications branch had offered — in writing — to install signals on the
new line for a fraction of the amount the Ministry now intends to spend. The Department recently installed signals at the Narahenpita railway station on the Kelani Valley line. Railway engineers replaced the old system with a modern user-friendly one and expect to do the same for all railway stations up to Kottawa by the end of the year.
The signals branch’s proposal was circulated among relevant officials. It was even briefly accepted by the ministry last year. But when a Technical Evaluation Committee (TEC) report was sought to take it further, the initiative died a natural death.
Then, on April 12 this year, Transport Ministry Secretary Nihal Somaweera wrote to CNMIEC’s Project Director, instructing him to start work on the installation of signalling, telecommunication and level crossing protection systems on the Matara-Beliatta section.
“SCAPC [Standing Cabinet Appointed Procurement Committee] decided to award the above contract to you and the Cabinet approval shall be obtained,” he wrote, in a letter seen by the Sunday Times. “You are kindly requested to commence the preliminary work with the pending approval of the Cabinet of Ministers regarding the above contract.”
Initiatives of this nature — at a cost as high as Rs 2.2 billion — cannot be implemented without Cabinet approval being granted first. Mr Somaweera told the Sunday Times there “may have been an omission” in the letter. He claimed that Cabinet sanctioned the project as far back as last year. He did not offer documentary evidence.
The project was given to CNMIEC because there was a provisional sum of US$ 15mn within its existing contract for the extension of the railway line. “As the client, we can order work at any time under the provisional sum,” Mr Somaweera said. “Since we have no money, the Ministry decided to use this for the signalling component. It is not a separate contract. We got a quotation from them. How can we go for a tender if we don’t have money?”
A provisional sum is “an allowance usually estimated by the cost consultant and is inserted into tender documents for a specific element of the work that is not yet defined in enough detail for tenderers to price.” Mr Somaweera confirmed that a Cabinet memorandum has been submitted in this regard “for their information”.
“The track extension was given without signalling,” he continued. “How can we operate the railways without signalling? We have to pay back the loan but without operation we cannot get income. So we decided to give this out. In this way, we don’t have to ask for additional funds. We can use existing provisions.”
“It may be true that there is a provisional sum,” said a senior official who did not wish to be quoted. “You can use this contingency, but not for useful, wasteful projects. We are talking about just four stations.” Questions have also been raised about CNMIEC’s competence to carry out a signalling project. It has mostly implemented civil contracts. Mr Somaweera said the company would form a joint venture with a signalling firm.
Asked how it was decided that the project cost should be US$ 15mn, Mr Somaweera said the Ministry negotiated on the basis of estimates made by the relevant TEC. “It is the responsibility of Technical Evaluation Committee to find out the exact cost and report the estimate to us,” he said. “Our decision, as administrators, was based on their recommendation.” He said the head of the TEC — J.I.D. Jayasundara, Chief Engineer Signals and Telecommunications of the Railways
Department — was answerable.
The Sunday Times found, however, that Mr Jayasundara did not head the TEC that evaluated the project. He was sidelined in favour of Palitha Samarasinghe, an Additional Secretary at the Ministry of Transport and former Chief Engineer Signals and Telecommunications. Mr Jayasundara was not even included as a member of the TEC.
Mr Somaweera also said it was not possible to compare the installation of signals at Narahenpita to the requirements of the Matara-Beliatta track because the former had only been an upgrade. “They made some improvements to the existing system at Narahenpita,” he maintained. “They did not set up a fully-equipped signalling system. So the scope is different.”
This claim was found to be untrue. The signals at Narenpita were a new system designed by engineers and met all requirements. The Signals and Telecommunications Department also hopes to put in cables to replace tablets in future.