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Sri Lanka contracts to China queried by legislator
27 Jan, 2012 14:14:00
Jan 27, 2012 (LBO) - A series of construction contracts given to Chinese firms mostly with borrowed money from China which will have to re-paid by Sri Lanka, should have been awarded by open tender, a legislator has said.
Harsha de Silva, a legislator representing Sri Lanka's main opposition United National Party, said the commercial viability of some projects were questionable, and in some cases Sri Lanka may be forced to sell the projects to China when debts could not be repaid.

China Harbour Engineering Company, a state run firm, was given a 360 million dollar contract to build a harbour in Hambantota in the South of the country without tender.

Later costs were revealed to have escalated by up to 140 million dollars which included the blasting of a rock in the seabed.

"China Harhour has revealed to the world but the government has not yet told the people, that it has already secured the second phase of the Hambantota port for 810 million US dollars," de Silva told reporters.

"It is not known if any tenders were called for this project."

China Harbour has also been given a contract to build a Chinese financed airport in Mattala for 200 million dollars.

China Harbour is also expected to get a 750 million dollar sea reclamation project.

"No one knows if any tenders were called," de Silva observed.

He said in the case of building a breakwater for Colombo port, which was financed by the Asian Development Bank, China Harbour failed to win in an open bidding process and that according to a report its bid was as much as 70 percent higher.

He said a 105 million tower project has also apparently been awarded to China but there was no knowledge about tendering.

He alleged that expensive deals were being made with Chinese firms with no transparency and tax payers will eventually have to foot the bill.

Already ministers were talking about swapping debt for equity and transferring ownership and management of some projects to China, raising the question whether unviable projects were financed with high cost loans, deliberately with that end in mind.

De Silva said a Chinese built coal power plant was breaking down constantly and there were statements that Chinese ownership and management was needed to keep it operational.

Aitken Spence, a Sri Lankan firm was forced out of a terminal project in Colombo Port, after a Chinese state bank that promised finance had pulled out and the Chinese partner will now own 85 percent of it. Sri Lanka's ports agency owns the balance.

De Silva said it was not clear whether the Chinese bank had pulled out financing apparently asking for a sovereign loan guarantee to edge out the local partner or because the viability of the project was in doubt.

He said costs had escalated sharply with the construction contract also going to China Harbour. Two Chinese contractors bid for the project.

He said Sri Lanka's state port firm had started to build a third terminal even before the second one was completed, as intimated to investors earlier undermining the viability of the project and undermining government assurances.

Sri Lanka has also started expropriating citizens and non citizens' assets bringing new risks, he said.

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16. Sundunhetti S K Jan 31
Wen Shengil lives in a country where concepts such as transparency and good governance are not known. So his ramblings understood, very well indeed.

Until now its very rare in our history such high value projects have been handled outside accepted standard practice.

If the administration continues to act arbitrarily, deciding who gets such projects, why we call ourselves a democracy.

15. shan Jan 31
The truth of the matter is that there has been very few tenders above 50mn that can be called free & fair. Almost all the large tenders everywhere are constructed in such a manner that they become attractive & tenable for very specific clients.
14. expat Jan 31
The Law in Sri Lanka requires tenders to be called for ALL projects / supplies / services etc., except in cases where national security is concerned.

These tenders have to be published in the National Gazzette for all to read. Anyone and everyone can bid provided you can meet the tender conditions.

Procedures require a TEC (Technical Evaluation Committee) to evaluate the tenders submitted and recommend the best and next best to the relevent ministry / department / corporation, etc. Next best is required in case the best for some reason does not accept the project. (Best example of this may be found in one of the allegations against the former Army Commander Gen SF; where he is said to have bought ammo from a company owned by his SIL as SF was the head of the TEC).

So people, whether ur Sri Lankan Indian Chinese or Japanese or any other, before crucifying the messenger (Harsha) read the article properly and digest his concerns. What all these people who use the space dont realize is that, at the end of the day politicians may come and go but the debts they enter into will be there for the general public to bear and settle!!!

13. Maiko Suik Sato Jan 30
Fact is that high cost projects have been granted to Chinese companies without calling tenders. There is no transparency in the deals. Chinese are not known for fair-play and transparency. They are predatory in their quest to fill the vacuum created by the fall USSR.
12. B.R.Fernando Jan 29
@Wen Shengli I partially agree with you but I dont think Dr. Harsha Silva was blaming the China or It's agencies for lot of failures, But he is pointing the finger at local Politicians we do not have to blame Chinese for what our Local Politicians eat for thats it.
11. Gupta Jan 29
This man Harsha de Silva is trying to justify his existence as an appointed MP (by Ranil W) by making all kinds of inane comments.He says that 'no one knows whether tenders were called'- what kind of Mp is he? Can he not ask a question in Parliament. I think this guy is overated and no time should be wasted on his partial, asinine comments.
10. Vince Jan 29
None of the grandiose projects carried out by the current regime is commercially viable. These projects will sit as expensive exhibits for the loyal rural servants (voters) of the regime. Like the exhibits they experienced at the Gam udawa exhibition in the 80’s and early 90’s.

So Good luck to the Chinese and the Indians with a keen eye on these projects.

9. Wen Shengli Jan 29
Personally i read about this so called Doctor statement published in few news websites of Sri Lanka which gives a wrong impression to Chinese investors,professionals and other citizens interest to invest in Sri Lanka, This statement it self contain typical ignorant political knowledge pattern and unawareness of international Economics, there are no such influences of Chinese communist party government about Sri Lanka or the investments do under the Sri Lankan government invitation and approvals, Sri Lanka not a popular state for Chinese people even for the tourism category in practical situation, Chinese investors and government run thousand of investment projects all around the globe including Antarctica, As a International professional in Management and Economics based in China knowing the practical and true details on every thing related Sri Lanka,i request these Sri Lankan paper qualified doctors who can utter few English words to show of ignorance to public not to make these type of statements, it is something good that this ignorant statement did not take in to consideration by the Xinhua news agency international, to bring negative impression on Lanka, Without knowing any true detail or practical knowledge of another country or it's government and people,do not make these type of statements to mislead public and international business community,
8. Sumedha Jan 28
These are horrible acts by the government. Please keep corruption in check or you will have to face your own karma.
7. gobbaya Jan 28
Srilankans are not concerned about these deals now, but later on it will be too late.
6. lokkuprick Jan 28
Why is this even news? They have moved the funds to their swiss bank account long time ago.
5. ProBono Jan 28
China Phobia in Sri Lanka when Euro nations are requesting China to bail them out of the sovereign debt crisis.
4. thalapathpitiye hemananda Jan 27
Yes we are and we think this legislator is an economic assassin contracted by USA
3. suniljay Jan 27
all these are the results of weak opposition in the parilemts. Shameful to hear these news! but True
2. Raju Jan 27
I would not know what kind of an economist this man is. When UNP sought different assistance for Mahaveli Project the amount of conditions imposed by donor countries some time made no sense. There were advisers at various levels to eat into the loan imposed by the donor country. We had to buy the sub equipment from their country which cannot be sold elsewhere. Anyway at least Chinese a participating in infra structure projects in Sri Lanka where as the west is silent. Harsha knows what he is saying has no value and they will not do anything better either.
1. Sri Lankan Jan 27
Are Sri Lankans concerned about any of these deals ?