Sri Lanka Brief
FeaturesNewsSri Lanka contracts to China queried by legislator

Sri Lanka contracts to China queried by legislator

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.


Back to Top