Contract for project not yet awarded: CHEC

China Harbour Engineering Corporation (CHEC), the party selected for the proposed elevated highway from New Kelani Bridge to Athurugiriya, said this week that it has not yet received contract.

“The contract related to the project has not yet been awarded to any Party and NO [sic] ‘agreement’ was reached between CHEC and the Government of Sri Lanka,” a statement—which was unsigned but had the CHEC seal—from the company said.

Last week, the Chinese company wrote to Highways Minister Bandula Gunawardena stating that it had allocated “substantial resources to get to the current level” in the process and that it wishes to swiftly implement the project in accordance with its agreement with the Government of Sri Lanka.

CHEC requested the Minister’s intervention in renewing its registration for the project, for which the Road Development Authority must complete a formality on its behalf with the Registrar of Companies. It also said its proposal was submitted in February 2021 after which it was selected as the “Preferred Bidder”; and that a letter of intent was signed in November that year.

“CHEC as an international bidder attending Tenders [sic] has always been following the procurement process of the country,” the company said this week in a statement. “The letter sent by CHEC to MOH [Ministry of Highways] is [to] ensure compliance with administrative requirements set out in the law rather than to influence the Government to implement the project.”

The company also revealed that the model proposed for the implementation of the project— design, build, finance, operate, manage and transfer (DBFOMT)—was required by the Highways Ministry “rather than CHEC”.

Under this, the RDA is expected to make a semiannuity payment of US$ 54mn (Rs 19.7bn at prevailing rates) for 15 years starting from the commercial operation date. A semi-annuity payment is a fixed fee every six months.

In its letter to Minister Gunawardena, CHEC said: “We understand that the finalisation of the project documents has reached its closing stage pursuant to addressing the comments issued by the office of the Honourable Attorney General of Sri Lanka in September 2022 and that the approval of the Cabinet of Ministers have [sic] been sought to finalise the Project and execute the relevant Project documents (‘Transaction Documents’).”

Its statement this week maintained that it followed due Government procurement procedure and that the MOH in April 2021 had informed CHEC that it was the preferred bidder pursuant to evaluation by the project committee. During ensuing negotiations, the parties incorporated suggestions made by the Attorney General into the project documents, it said. At present these drafts are “in process of seeking the final approval from the office of the Hon. Attorney General”.

“To date, the negotiation of Project has not yet been concluded and the Tender process is still on going [sic],” it pointed out. This was the reason for seeking renewal of registration.