Massive kickbacks in unsolicited projects

Sunday, March 16, 2014 It has long been suggested that the UPFA Governments signature fondness for unsolicited proposals comes from the generous fringe benefits they earn for some of its members. It is also speculated that Sri Lan a pays premium rates for its gleaming ne! infrastructure because prices are inflated to include massive ic bac s. In a recent intervie! !ith the Sunday "imes# "reasury Secretary P. $. %ayasundera did not deny that commissions are factored into pro&ect costs. 'e only said he did not no!. (hile ac no!ledging the e)istence of agents * !ho commonly negotiate payoffs and have close ties !ith the fe! names that control this Government * +r. %ayasundera stressed that ,no commission guys visit this place- .the Finance /inistry0. "he logical 1uestion then is !here do they go2 +ocumentary proof might be elusive but it can be reasonably surmised that somebody is earning fast buc s off Sri Lan as development programme. %ust ta e the statistics. As !e reported in 3ctober 4567# the 48 m long 9olombo:;atunaya e <)press!ay cost the country =s. 6.> billion a ilometre. "his is around double the cost:a: m of the completed ?@ m stretch from ;otta!a to Pinnadu!a on the Southern <)press!ay. "he 9olombo:;atunaya e <)press!ay !as built and funded by the 9hinese !ith the Sri Lan a Government meeting a small percentage of the re1uired capital. Its total cost !as =s. A@.B billion. $y contrast# the relevant section of the Southern <)press!ay !as funded by the %apan International 9ooperation Agency .%I9A0 and the Asian +evelopment $an .A+$0 at =s. ?8.> billion. +o the comparisons tell a tale2 "he "reasury chief insists that the t!o pro&ects are not comparable because the 9olombo: ;atunaya e <)press!ay !as built on marshy land and had several overpasses and bridges. $ut even after those factors are discounted# the price is inordinately high.

Future or ongoing high!ay pro&ects# also a!arded to the 9hinese# are still more e)pensive. "his ne!spaper carried a list of these pro&ects last !ee . For instance# the ?.74 m:long 3uter 9ircular 'igh!ay from ;ada!atha to ;era!alapitiya is an ungodly =s. B.4 billion a m. A 48 m e)tension of the Southern <)press!ay to /atara and $eliatta !ill be =s. A billion a m. A further 75 m e)tension of the Southern 'igh!ay from $eliatta to (etiya costs =s. 6.> billion a m. At these rates# any Sri Lan an should &ustifiably be !orried that unsolicited pro&ects are suc ing the country dryC and that somebody is evidently poc eting the difference bet!een mar et price and pro&ect price. It is not &ust the numbers that are e)orbitant. (hen it comes to 9hinese pro&ects# Sri Lan a loses out in other !ays. "he contractor is 9hinese# the machinery is 9hinese# the technology is 9hinese# much of the material is 9hinese and many of those !or ing on:site are 9hinese. <ven !here there is lea age# it doesnt reach the locals * e)cept perhaps# the commission agents and their political patrons. (hen Sri Lan a secures aid# it is perhaps understandable that the pro&ect contractor and other supplies are from the donor country. $ut !here e)pensive loans are concerned# !hy must the same terms * and !orse * apply2 "he government argues that there is no other !ay to build vital infrastructure at the re1uired speed. It has# therefore# created some rudimentary structures to handle unsolicited proposals but has essentially thro!n open competitive bidding into the 'ambantota $ay. Advertisements# deadlines# tender boards and committees ta e time. "he layers have no! been cut a!ay and the process simplified. $ut# !ith fe!er cogs in the !heel# transparency ta es a serious hit. Pro&ects go through fe!er approvals and fe!er 1uestions are as ed. "here is nothing to compare prices against. In the absence of streamlining and accountability# some proposals are passed faster than others. It is !ho you no! that matters. All types of companies are no! ha! ing goods and services to Sri Lan a unsolicited. "he Indians are also here ,in a big !ay- !ith their rail!ay and po!er pro&ects# among other things. Dast !ater supply pro&ects are being implemented !ithout open competitive bidding. "he Government has sanctioned ports and airports# po!er stations and hospitals# hotels# resorts and casinos# communication to!ers# dams# technology par s and much more. (orse# large purchases are increasingly and repeatedly made !ithout tender. "hese include fuel supplies# rails and rail!ay carriages# !aste disposal units and incinerators# ambulances# fire:fighting e1uipment# !ater carriers# vehicles# computers and information technology systems# even cattle. All of these entail hefty ic bac s.

"he la! decrees that the details of these transactions must be declared. $ut there is no single database that offers the information in an accessible manner. 3fficials typically cra!l into a shell !hen the !ords ,unsolicited proposal- are mentioned. "he public is ignorant of !hat pro&ects are lined up and hears of them .in segments0 only after 9abinet approval is granted. /inisters are found to be poorly informed or lac adaisical about !hat goes through their hands. "here is certainly no discussion# vibrant or other!ise# in 9abinet about the merits and demerits of the initiatives of a select group of players. "he Government insists that the prices !e pay are not unreasonable. It says that technical committees comprising professionals and senior government officials evaluate the proposals and decide prices. $ut in the absence of competing bids# ho! does one no! that the terms one is evaluating and deciding upon are fair2 And ho! can one determine beyond doubt that the same goods# services and grand pro&ects cannot be secured and implemented at cheaper rates2 +o technical committees * that are under Government pressure to complete their tas fast * ta e the initiative to contact other suppliers for price comparison purposes2 +o they chec on the internet and other available sources of information2 And if they do# !hy are the prices still this steep2 /assive development programmes have been implemented before but never has the process been this porous. A sum of =s.65A.8?B billion .at current prices0 has been invested on the /aha!eli Programme from 6?B5 to 4566. Granted this !as 45 years ago. Still# the /aha!eli Pro&ect !as so colossal that it generated @55:855 mega!atts of po!er# irrigated 785#555 acres and provided substantial do!nstream development for an entire population. "he then Government follo!ed procurement procedures# clear proof that even initiatives of such scale can be carried out !ith some degree of transparency if the essential leadership is provided. "he internet is replete !ith studies on ho! unsolicited proposals and corruption go hand in hand. In 455B# a (orld $an funded !or ing paper states that many unsolicited pro&ects are associated !ith a lac of competition and transparency. It does not advocate a banning of unsolicited proposals. Instead# it states that# ,At a minimum# a principle should be that all unsolicited proposals are channelled into a transparent# competitive process !here challengers have a fair chance of !inning the tender.- $ut the Government is clearly in no mood for all this. It is going full steam ahead !ith unsolicited pro&ects even though some of its recent efforts have become a standing &o e in the country. It !ants development Eat any cost and to hell !ith the cost:benefit# or so it seems.