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Water and hydropower project leaves soiled legacy
View(s):Since the inception of the US$548.15 million Uma Oya project, which was inked during a visit to Iran by Mahinda Rajapaksa, the then president, from November 26-28, 2007, multiple socio-economic problems have remained as its tarnished legacy.
It was a project undertaken with a financing facility from Iran’s Export Development Bank and was to have been completed in five years. The financial agreement was signed on April 28, 2008.
A.H.M. Fowzie, then minister of petroleum and petroleum resources development, signed the memorandum of understanding for Sri Lanka in 2007, while Seyed Parviz Fattah, minister of energy signed for the Islamic Republic of Iran.
Mahinda Rajapaksa was also minister of finance and planning, while Chamal Rajapaksa was then minister of Irrigation and water management, and he described Uma Oya as “a priority item,’’ of ‘Mahinda Chinthanaya’ in a memo to Cabinet in February, 2008.
Rohitha Bogollagama was foreign minister then.
The financing agreement was signed by P.B. Jayasundara, the secretary of the Ministry of Finance and Planning on April 28, 2008, for US$ 548.15m. Iran’s Export Development Bank agreed to a facility of US$ 450m for a 15-year repayment term with a grace period of 5 years. In May 2008, Mahinda Rajapaksa noted in a Cabinet memo that Sri Lanka will finance the “balance 15%’’.
From the project launch itself, it was noted for large scale financial waste.
For the launch ceremony, the Ministry of Irrigation and Water Management spent Rs 33.2 million for “two monumental columns’’ plaque, name board and two flag poles. And Rs 2.13m was spent for three pandals, and more than Rs 1.1m for the cultural show, and Rs 1.8m for the stage and chairs, as well as Rs 2.59m was spent for ads in seven newspapers, a special report by the national auditor shows.
The project had insurance cover from Sri Lanka Insurance Corporation of US$529.05m up to March 2016, including cover for major perils such as flood, subsidence, collapse, or earthquake. The gross premium was US$1.49m.
Under the MOU signed on November 27, 2007, Farab Energy and Water Projects based in Teheran, was named the main contractor. The Ministry of Mahaweli Development and Environment was named the executing agency. The contract was signed on April 28, 2008 following the visit to Sri Lanka of the President of Iran, Mahmoud Ahmadinejad.
Later, it was also agreed that insurance cover for damage to property and personal risks should be US$ 50,000 per person and US$ 500,000 for physical property.
The first leak in the project’s main tunnel sprang on December 24, 2014 and on February 16, 2015, work was suspended. By then, 600 homes were damaged and the estimated damage was Rs 300m. By 2015 October 16, Rs 29bn had been spent.
In the Bandarawela Divisional Secretariat Division, 1,344 homes were damaged and Rs 165.5m was paid by January 9, 2019. For owners of 645 homes in Ella, Rs 30.15m was paid. For 18 families in Bandarawela, Rs 2.28m rent was paid, while for five families in Ella, Rs 438,000 was paid.
By December 31, 2016, the damage was spread out in eight Grama Sevaka Divisions. Damage had spread to Kinigama, Thanthiriya, and Bindunuwewa in Bandarawela, and Heel Oya and Palleperuwa in Ella. Reports said 618 wells had dried out.
The national auditor in 2018 concluded the project deviated from the Mahaweli Master Plan, failed to carry out a feasibility and an environmental study and failed to provide facilities agreed with the
contractor as well as timely solutions to problems. The contractor was selected on an unsolicited basis.
The auditor recommended that Rs.1.404bn paid as compensation by June 30, 2017 should be claimed from the Iranian contractor.
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