Central expressway project phase 3 tainted with irregularities
The elimination of a Chinese company from the long delayed, third phase Central expressway construction contract without opening their bid submitted for the tender has triggered concerns of irregularities in the tender process, several heads of leading construction companies said.
While a local consortium named LDIC has won the bid despite the bid being higher than the Chinese party, the Chinese company has complained to the President’s office that their bid was not even opened.
The disgruntled bidder, Metallurgical Corporation of China (MMC) was engaged in road construction in Sri Lanka for around two decades and their rejection of their bid without even considering their financial proposal has created a doubt, they added.
The proposed Central express highway was offered to international investors in May 2011, to be built as a privately financed toll road on BOT (build, own and transfer) basis without funding from the Government, while costs were to be recovered with collected toll charges for an agreed time period.
The Cabinet approved awarding the construction of 100 km Kandy Expressway originally to two Chinese companies, China Merchant Holdings (CMH) and China Merchant Huajin Investment Company (CMHC) in July 2012, and a Memorandum of Understanding (MOU) was signed.
Completely deviating from the original MOU, the then government decided to implement the Central expressway in four stages calling for fresh tenders to award construction for new investors local, international or consortiums or both in 2013.
“Allegations of tender irregularities, corruption, political bungling and official interference in the construction of Central expressway cropped up after phasing out of the whole project,” one construction company head told the Business Times.
With the change in the scope of Central expressway, the first three sections were expected to be completed by 2018. But today the entire project is further delayed; also funding requirements keep on mounting.
Under this set up the Ministry of Finance has given instructions for the construction of the third section of the Central Expressway from Rambukkana to Galagedara expeditiously as it was delayed since 2015.
Accordingly a Request for Proposals (RFP) was called and the bid opening took place on 08-10- 2021 in which only two companies MCC and LDIC, the local construction consortium submitted bids, official documents revealed.
The Cabinet appointed Procurement Committee has awarded the tender to construct 20 km section of the Central Expressway from Rambukkana to Galagedara the third stage of the project, to LDIC.
MCC has sent a letter expressing their concern to the President copying it to six other top officials including Commercial Counselor – Chinese Embassy, Presidential Secretary, Treasury Secretary, Central Bank Governor and Highways Ministry Secretary.
The company informed the President, that only the financial proposal of the local consortium was opened rejecting their bid.
While claiming their price was lower than the local bidder they noted that it is customary in a democratic procurement evaluation that the examination of just one offer does not facilitate price comparisons.
A senior official of the Highways Ministry said that the selection was made by the Cabinet appointed Negotiation Committee and he cannot comment on the awarding of tenders.
According to the letter sent to the president the Chinese company had submitted a bid of Rs. 210 billion and had agreed to provide US$120 million directly to a local bank at the time of signing the agreement while the Sri Lankan company had submitted a bid of Rs. 375 billion, Rs.165 billion more than the Chinese bid.
In case, the government goes ahead and awards the tender to the local consortium, this company has requested a guarantee from the Treasury to secure a loan from the local bank.
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