Kandy Expressway A series of political

blunders

Thursday, 24 August 2017

The Kandy Expressway, also known as the Northern Expressway and the Central
Expressway (name keeps on changing), was first proposed in the early 1990s,
taking a route over the Kelani Rivers northern flood plain and was challenged
over environmental issues; accused of building a dam disturbing rain water flow,
thereby creating floods. RDA was unable to meet the accusations and the
proposal had to be abandoned.
In the next attempt, a feasibility study was awarded to a Swedish consultancy firm
and completed in December 2001. According to the proposal, the expressway will
commence from the Kadawatha interchange of Outer Circular Highway
terminating at Katugastota. The selected corridor lies close to Ganemulla,
Gampaha, Balabowa, Banduragoda, Mirigama and Ambepussa (Phase 1 48.2km)
and Devalegama, Rambukkana, Hatharaliyadda, Hedeniya, Katugastota (Phase 2
50.7km). Also, a 12-km ring road around Kandy city from Katugastota to
Gannoruwa.

Offer to investors
The proposed highway was offered to international investors in May 2011, to be
built as a privately financed toll road on BOT (build, own & transfer) basis. The
investor was expected to design the road over the pre-selected corridor, acquire
land, pay compensation and construct related facilities. The design and
construction would be under the supervision was awarded to Australian
consultant SMEC Engineering in December 2012.
RDAs estimate
The Northern Expressway was expected to be constructed in two phases: Phase 1
48.2 km section from Kadawatha to Ambepussa estimated at Rs. 70 b; Phase 2
50.7 km section between Ambepussa and Katugastota was priced at Rs. 90 b.

Award of contract
In July 2012, Cabinet approved the award the construction of 100km Kandy
Expressway under Build Own Transfer (BOT) system to two Chinese companies,
China Merchant Holdings and China Merchant Huajin Investment Company and a
MOU was signed. The website of China Merchant Huajin Investment Company
noted under China company lands 1 b USD highway project in Sri Lanka.
The first 45 km of the Expressway traverse a flat terrain, the next 15 km a rolling
terrain and the balance 38 km hilly terrain and the route had been approved by
the CEA in 2008. A significant feature of the second section of expressway is the
inclusion of 10 tunnels, two of length of around 400 m and eight of length of
around 30-225 m. The Chinese agreed to construct the Kadawatha-Ambepussa
section for a 35-year BOT period and construction was expected to begin in
August 2012. The Chinese indicated that the second sector, Ambepussa-Kandy,
would require a longer period.
Shifting to Enderamulla
In the original trace prepared by the Consultant the first 0-10 km was on firm
ground. But in July 2012 when villagers near Gampaha protested against their loss
of property, Minister Felix Perera agreed to relocate the route. The road
commencement was shifted from Kadawatha to Enderamulla and join the original
route at Mirigama, increasing the distance by five kms. The amended route from
Enderamulla continued via Ragama, Gampaha, Veyangoda to Mirigama with a
sharp right turn to Ambepussa. The principle of avoiding built-up areas was
adopted for the entire alignment. The new route not only included villagers
concerns, but also accommodated wishes of politicians.
Enderamulla is surrounded by marshes and the amended route ran parallel to the
railway line, traversing over paddy, marshy and uncultivated lands. Marshes on
the diverted route necessitated nine km of viaducts (overhead road). Viaducts
cost over six times the cost of a firm-ground road and the increased costs altered
the financial viability of the project, and the Chinese investor was no longer
interested.
Changes to Kandy route
In March 2013, Mahinda Rajapaksa during a visit to Kandy reviewing progress
noted problems in land acquisitions in Kegalle, Rambukkana had delayed
implementation of the project. Rajapaksa directed the expressway be built
through Kurunegala and Galagedara. This diversion pushed the highway nearly
20km northwards and increased the highway length and the costs. Rajapaksa had
a soft corner for Kurunegala, as noted by the decision to contest from Kurunegala
District, abandoning Hambantota, after losing the presidency.
Inauguration of Northern Expressway
With the route change, the contract was awarded to Australian consultant SMEC
to select a suitable road corridor to link the highway with the Northern Province,
with a link to Kandy. The highway to allow speeds up to 100 kmph.
nStage 1 Enderamulla to Meerigama 37.1km
nStage 2 Meerigama to Kurunegala 39.7km and Ambepussa link (9.3km)
nStage 3 Pothuhera to Galagedara (Kandy) 32.5km
nStage 4 Kurunegala to Dambulla 60.3km
The revised Northern Expressway intended to connect Enderamulla with
Pothuhera and continue to Katugastota and Gannoruwa. In addition, highway
commencing from Pothuhera will pass through Kurunegala, Galewela and
Dambulla. The road will have interchanges at Gampaha, Veyangoda, Mirigama,
Nakalgamuwa, Pothuhera, Dambokka, Kurunegala, Rideegama and Melsiripura.
Under revised Expressway, distance wise Enderamulla to Kandy became 120km,
whereas in the earlier proposal Kadawatha-Kandy was only 98.9km.
RDA engineers allege the consultancy award to SMEC without calling other
quotations and the price of Rs. 1 billion was excessive. They also claim the route
was deliberately moved over paddy fields/marshlands, necessitating a large
number of overpasses and excessive earth-fills.
In November 2014, prior to Presidential elections, Mahinda Rajapaksa re-launched
the construction by laying a foundation stone at the Senkadagala entrance and
also awarded the Stage I of the contract to Metallurgical Group Corporation of
China (MCC).
Changes to Outer Circular Road
The last section is OCH Phase III from Kadawatha to Kerawalapitiya (9.63 km) had
been awarded to MCC in January 2013 for Rs. 66.69 billion with a loan wfrom
Chinese Exim Bank. The OCH 3 is a four-lane highway with provision to expand to
six lanes to accommodate traffic leading to Kandy Expressway commencing from
Enderamulla.
Earlier, the 54km stretch Kadawatha to Ambepussa was priced by the RDA at Rs.
70 billion. But shifting the commencement from Kadawatha to Enderamulla
moved the highway into flood plains and embankments had to be made larger, so
the RDA Engineers revised the Enderamulla to Mirigama estimate to Rs. 100
billion. But the price of contractor, MCC, was Rs. 29 billion higher.
Expressway under Yahapalanaya Government
The new Government appointed a committee of three ministers to determine the
future of the Kandy Expressway. The Committee recommended in March 2015 to
bring back the commencement of the Expressway from Enderamulla to
Kadawatha, also renaming it as the Central Expressway. The biggest change was
the possibility of reducing costs of OCH 3 by approximately Rs. 24 billion (or 30%)
by removing the provision to widen the road to six lanes and the redundancy of
the Enderamulla interchange. The Committee recommended that with the savings
from OCR 3, Kadawatha to Kossinna (five km) sector could be built. The highway
beyond Mirigama would be left unchanged from previous Government proposals.

Sector 1 Kadawatha-Mirigama sector

The construction of the Central Expressway was inaugurated again by Prime
Minister Ranil Wickremesinghe on 3 August 2015, by unveiling a plaque at
Kossinna, north of Kadawatha. Public were informed that the construction of the
first section of the expressway has been offered to China Metallurgical
Corporation, funded by a loan from China's Exim Bank. The negotiated cost of the
32.5km-long Kossinna to Mirigama sector stands at Rs. 145.8 billion or Rs. 4.5
billion per km.
The new Government was unenlightened to retain a 120km long highway
compared to the former 98.9 km. When the Kadawatha-Mirigama sector cost Rs.
4.5 billion per km, the most difficult and expensive sector would drag costs to Rs.
6 b/km, resulting in an additional cost of staggering Rs. 120 billion for the 20 km.
The Government expected savings from OCH 3, also built by MCC could cover the
cost of the first five km from Kadawatha to Kossinna and awarded the Kadawatha
to Mirigama 37.1 km to MCC without tender. Funding for the project was
expected from Chinas Exim Bank.
The contract was divided into two sectors: Kadawatha-Kossinna and Kossinna-
Mirigama. Kadawatha to Kossinna was to be completed from savings from OCH 3,
as indicated by the official committee. However the savings from OCH 3 found to
be evasive, as the local engineers were found to be completely inexperienced in
negotiations with a shrewd international contractor. The contractor later
increased the cost of entire road to Rs. 158 billion, or Rs. 12 billion more than
original.
Section II
The road section from Mirigama to Kurunegala and branch to Ambepussa
spanning 39.29 km, as Section II, was sub-divided into four packages and groups of
local contractors involved in road construction were requested to submit bids. But
the irony was each group bid for a single package avoiding competitive bidding.
Naturally, bids received were 18% to 20% higher than the Engineers estimate, but
were negotiated lower. The Engineers estimate was Rs. 126.8 billion, but the
finally-agreed negotiated price was Rs. 136.8 billion. In November 2016 on the
recommendation of Minister of Highways, the Cabinet of Ministers approved the
award. The cost per km reached Rs. 3.49 per km.
Calling quotations without competitive bidding is not generally done and would
lead to higher prices. Also contractors would have been aware of the Engineers
Estimate. In addition, during the construction there could be variations to the
contract, leading to higher final costs.
Section III
With the mountainous terrain, the 32.5 km Section III from Pothuhera to
Kadugannawa is the most difficult and expensive road section. The section
includes four interchanges at Pothuhera, Polgahawela, Rambukkana and
Galagedera, with three tunnels, 290m, 200m and 235m; and in addition 12 main
bridges and 17 viaducts across the floodplains of three rivers; Rambukkan Oya,
Kuda Oya and Kospothu Oya.
The Cabinet agreed to award the third section of the highway to Japanese
contractors with funding from a Japanese bank. The Japanese Ambassador was
requested to nominate possible contractors and nominated Taisei Corporation,
Penta Ocean Construction Co. Ltd., and Wakachiku Construction Co Ltd. The loan
terms of Bank of Tokyo-Mitsubishi UFJ Ltd. (BTMU) are said to be expensive and
the Sri Lankan Government has requested more favourable terms.
When tenders were called for the first round only Taisei Corporation submitted a
bid. But Taiseis bid was rejected due to non-submission of bid bond. In the
second round two responded; Fujita Corporation offered the lowest bid at Rs. 147
billion and Taisei at Rs. 159 billion to build the road. But Fujitas lower bid was
rejected by the tender evaluation committee, claiming the company had not
carried out a road construction of such magnitude in the recent past. The third
party Penta Ocean Construction specialises in marine works and land reclamation,
not road building.
The entire process lacked transparency; why was the project not offered to all
Japanese contractors? In calling quotations only from three contractors, supposed
to have been recommended by the Japanese Ambassador, why was their road
building experience not checked, rather than at evaluation of bids? Its apparent
that Taisei was favoured from the beginning.
Regarding the experience of rejected Fujita, the companys website indicates a
large number of varied construction works carried out by the company. Latest
news reports indicate the two contractors Taisei and Fujita have agreed to form a
consortium to carry out the project and the price would be around Rs. 150 billion.
Discussion
The Kandy Road is the most travelled road in Sri Lanka and should have taken the
shortest route. Original study of the highway was in 2001, but the design
presented to investors in 2012, as Kadawatha-Ambepussa was 48.2 km, passing
through Gampaha, Veyangoda, Mirigama to Ambepussa, whereas the same on
the AI highway amounts to only 43 km.
A traveller from Kadawatha during a non-rush hour would realise the twists and
turns taken by the A1 road. Thus a properly designed highway from Kadawatha to
Ambepussa should not exceed 40km. The excessive length was due to deliberate
route modification to connect Ragama, Gampaha, Veyangoda and Mirigama. It is
most likely that the route was modified on instructions of Basil Rajapaksa. When
questioned by a journalist, the Minister claimed the road would collect travellers
from cities. Should an expressway take a school-van route? In addition Mahinda
Rajapaksa routed the highway close to Kurunegala, adding another 20 kms and
taking the road over marshes and rivers.
If Kadawatha to Ambepussa was reduced to 40km with 50.7 km Ambepussa-
Katugastota, the highway distance would come down to 90.7 km, whereas the
current road amounts to 120km. The current highway being 30km longer, every
motorist would spend minimum two litres of petrol each way.
When expression of interest was called in July 2012, China Merchant Holdings and
China Merchant Huajin Investment Company agreed to construct the road on BOT
basis for 35 years, even with the longer route. They indicated to construct the
second phase for 50 years. This would have allowed the highway without local
capital or running costs to the country. Chinese indicated the two sectors would
cost slightly over $ 2 billion or Rs. 300 billion.
Current costs are:
Kadawatha to Meerigama Rs. 158 billion
Mirigama to Pothuhera and Ambepussa link Rs. 137 billion
Pothuhera to Galagedara (Kandy) (32.5km) Rs. 150 billion
Total Rs. 445 billion
Initial route change was to accommodate protests by locals. Our people protest at
every turn of the Government. Politicians should have explained to the public the
national importance of the project and the need for the shortest route. For
persons who lose their housing or land, proper compensation/alternate housing
needs to be settled promptly. It is known that compensation payments by RDA are
well above the market rates, including resettlement costs. If the situation was
handled properly, the highway would be in operation by now.

The new Government too failed to investigate the massive project in detail and
blindly accepted modifications made by the Rajapaksa Government. They failed to
obtain opinions of educated persons in road construction and contract
management prior to taking decisions. Politicians were only interested in filling
their pockets and contracts for all three sectors was awarded on negotiated basis.
If the Chinese offer in 2012 was accepted, the people would be enjoying the
highway by now, without loans or interest payments. The present highway will
cost an additional Rs. 150 billion and interest on loans would be payable.
Extending the highway by 30 km means every vehicle will consume additional two
litres of petrol on every trip to Kandy one-way forever. The proposed overpriced
Kandy Expressway is the consequence of a series of political blunders and public

will be expected to endure.

Posted by Thavam