14 December, 2017

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A Poor House & A Poorer Economy: The Real Cost Of ArcelorMittal Steel Houses For War Affected Communities

By Chandra Jayaratne

Chandra Jayaratne

On 9 May 2017, the Cabinet approved the construction of 6,000 pre-fabricated houses for war-affected communities in the North and East. It also approved the construction of 10,000 to 15,000 brick and mortar houses per year.

All available information suggests that the construction of the 6,000 pre-fabricated houses will be awarded to ArcelorMittal and raises many disturbing questions:

  • The many limitations and unsuitability of ArcelorMittal’s prefabricated houses have been well highlighted. Yet, why does the government insist on these houses for war-affected communities?
  • The cabinet decision notes that each house will cost 1.5 million rupees each (without import duties and taxes). Why is the government committing to excessive cost when only last year the Ministry of Resettlement initiated a scheme to build 550 sq. feet brick and mortar houses in the North and East for 800,000 to 900,000 rupees each?
  • Why is the Government opting for imported prefab houses, when brick houses built locally will generate employment, boost local enterprises and benefit the economy?
  • How are the 6,000 ArcelorMittal houses going to be financed and on what terms? Given the present economic and external debt situation and the depreciation in exchange rate, contracting any foreign debt, which was how ArcelorMittal was going to finance its project originally, is contrary to national interest.
  • On what basis has the cabinet decided to award 6,000 houses to ArcelorMittal without a tender? Many domestic construction companies did not qualify for the initial tender owing to the scale of the original project (to build 65,000 houses in 5 years). Why are these 6,000 houses not being retendered?
  • The cost of ArcelorMittal houses will increase substantially if import related duties and taxes are added. Is the government going to waive duties and taxes for ArcelorMittal, effectively subsidising them? Will it also do the same for import of cement for construction of the masonry houses, which will further reduce their costs?

It is now almost two years since the government of Sri Lanka announced its intention to construct 65,000 houses for war-affected communities in the North and East. It is regrettable that this project has yet to commence. The primary reason for this delay is the deeply misguided decision in early 2016 on the part the Ministry of Resettlement to award the entire project to the steel multinational ArcelorMittal to import 65,000 pre-fabricated houses. Significant public outcry and concern amongst a range of experts, officials, and political leaders over the adverse financial, economic, technical, social, and cultural implications of this decision led to several reviews and eventual withdrawal.

On 19 May 2016, we—a multi-disciplinary group of independent professionals and social activists—proposed a detailed, viable and comprehensive alternative proposal to the government. This 50-page proposal would allow the building of 65,000 brick and mortar houses at half the cost of the ArcelorMittal houses with domestic financing options. Despite this, the government did not take decisive steps to change course and initiate a much-needed housing for the war-affected through a socially empowering, financially equitable, and locally appropriate project.

We now call on the government to:

  • Immediately review the decision to award the construction of 6,000 pre-fabricated houses to ArcelorMittal.
  • Take urgent steps to initiate the construction of the proposed 10,000 to 15,000 brick and mortar houses per year in the North and East including by committing the necessary financial resources and initiating a procurement process that is transparent and in national economic interest.
  • Ensure that housing projects are participatory and include social mobilisation, maximise local and national economic benefits and avoid creating indebtedness and other problems associated with previous housing projects.

Our Alternative, in Summary:

Our proposal included a domestic financing option—a formal term sheet from a leading local investment Bank has been secured, which demonstrates that raising domestic resources through a Rupee bond in four tranches of LKR 16.25 billion each is more beneficial and indeed a viable option. Apart from reducing foreign debt, for the same cost as AcelorMittal’s 65,000 houses our proposal illustrated that 102,000 masonry houses can be built with local financing.

For a detailed timeline of events please see: http://bit.ly/2dp9eWk

*Issued by Chandra Jayaratne, on behalf of a group of professionals with expertise in engineering, architecture, planning, community housing, financing, economics, development planning, law, community organisation, and project management. 

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Latest comments

  • 11
    0

    Our professionals are experts as they have been constructing houses for many decades – our grandparents’ houses lasted a lifetime.
    The proposed steel houses were earlier inspected by our engineers and found unsuitable.
    Swaminathan is not a construction expert/engineer – why is he so insistent on steel houses.
    Have palms been greased.

    • 8
      0

      agree will Swaminathan live in one of these houses?

      • 9
        0

        Swaminathan first of all has no idea or experience about resettlement of refugees or about building suitable houses for occupation by them.He has been parachuted by the UNP as an MP because of his longstanding loyalty to that party and a personal friend of it’s leader who happens to be the PM of the country. Swaminathan.
        He is the type of person who has no ability to know or will. to understand the situation as the other side see it because of his habit of putting the worst interpretation on what his critics say. That precisely his problem.

      • 3
        0

        There is no justification for the Government to award ArcelorMittal to construct pre-fab houses in the North/East sans tenders unless otherwise there is a politico who is after a handsome commission. I am blunt but no point of beating around the bush.<<<< The present/future policies of GOSL should be transformed to give priority to Local Entrepreneurs and harness their entrepreneurial skills which in turn will accelerate the economic growth and employment. When there is a local offer which is eco-friendly, cost effective, high quality, durable and more responsive to local needs and the weather patterns, it is unacceptable for the Government to offer it to a foreign company.<<<<<Pre-fab Steel houses were brought as an alternative to Wood Houses, not Concrete/Brick Houses. —-On the other hand given the weather conditions in N&E, earthquakes, floods, cyclones, rainfall and hot/sunny climate, the decision of the Government to go for Steel Houses is hilarious. <<<<<< Very thick insulating sheathing of the highest quality should be used for steel walls to prevent temperature transfers. Otherwise the heat will be unbearable. Did the Government check on that? Concrete walls keep out noise whereas Steel walls will bring in and transfer noise between walls. If there is a fire, obviously Steel will melt faster than concrete/brick. Moreover, Steel roof will be really noisy when it rains. ——- ArcelorMittal proposal doesn't make any contribution to economic growth, employment or the environment. The Government has no reason to reject the more viable, eco-friendly, cost efficient Local offer. <<<<< There is nothing to review. The Cabinet should revoke their initial decision to award the construction of houses to ArcelorMittal and accept the Local Offer.—- Government has no right to further delay in constructing houses to the war affected people.—- They are already two years behind!

        • 0
          0

          Thank you CT for publishing my comment. I wanted to make a comment on the idiocy of this offer to Arcelor Mittal to build Steel Houses in the North & East for sometime but didn’t get a chance. On the other hand, I wanted to say a few words in support of our local entrepreneurs.

        • 0
          0

          The reason for the Sri Lankan Government to choose the Indian owned Arcelor Mittal over local entrepreneurs even foregoing the usual tender procedure warrants reasonable suspicion. Who would prefer high cost steel houses over low cost concrete/brick houses?

    • 6
      0

      It’s all in the money required for the present and future. Laxmi is director Rothschild and Prince Charles neighbour. Punjabi American ambassador is all for muslim populating the region.

    • 7
      0

      Swaminathan is a back door entrant (through the National List of RW who is very familiar with rear door entries) into Parliament and thereby into Cabinet with no electoral responsibility. His being there allows RW to crow to the world that he has a Tamil from the UNP in cabinet!

      Ego driven individuals such as Swaminathan, RW et al are a bane to Sri Lankan society,. As a matter of fact, if you take the jumbo cabinet – it is obvious with the exception of a very few, none of them are subject matter experts.

      Though leadership does not require subject experience, leadership is being humble to learn and be educated and then lead in making the best choice and implement it sans any financial or other favors being offered to make a decision which is contrary to conscience and the overall good of the nation.. Classic example of such leadership is Henry Ford! He ensured he was surrounded with the best brains and he listened to them and make great choices which made his motor car company a leader.

      It is time for professionals such as the author of the foregoing article to rise up as a body and the press – both media and print, educate the poor masses of the ill advised move of the Government. They should be encouraged to rise up against this construction and occupation of such unsuitable habitat being made for them without violence.

      Considerations other than pure merit of such steel housing for the war victims cannot be ruled out given the dynamics emerging from the investigations into the bond scandal. Many more scams and scandals are let to lie dormant by a bunch of hoodlums who we the “foolish people” elect into office.

    • 2
      0

      May be he had already received a big commission and if he says no he will have pay back the commission: May be some others in the govt. also got some share in the loot. they do not care about the people or country but to amass their bank account.
      Then what is the reason for forcing this unwanted, unhealthy houses on poor people: blood sucking leeches.

    • 1
      0

      The Hendela and Mantivu (off Batticaloa on an island in the Batticaloa lagoon) Leprosy Hospitals built in 1708 by the Dutch and in 1920 by the Portugeese respectively, of bricks and mortar with tiled roofs and wooden superstructure, are still standing, in perfect condition, whitewashed only, occasionally.
      At Hendela, there is a stone plaque with the date and inscription in the Dutch language.

  • 1
    7

    Why all these problems are only in the Sinhale – North and not with the Eastern Tamils. IT looks Eastern Tamils are more respectable people.

  • 6
    2

    Yahapalanaya is punishing if NPC and others try to tell something correct. NPC & EPC needs minimum 120,000 houses urgently. They asked this money and approval. Yahapalananaya wants is to build its own Norochcholai there. Two years ago, it obtained a quote for 65,000 doghouses for the price of 102,000 human houses. Can they remove the 150,000 Rapist army from there? Then the people can live peacefully. They don’t need doghouses from the Yahapalanaya.

  • 9
    0

    Right from the beginning D.M.Swaminathan has shown udue interest in this project. In this regard the government has failed to listen to the views of the elected representatives of the people. These houses are like toys and not suited to the warm climate in the north. Their lifespan is less than 15 years and no repairs can be carried out by the owners. The problem with this government is it is not listening. The President and Prime Minister are not governing. They are drifting aimlessly.

  • 8
    0

    It is quite evident that even if Swaminathan argues for it in favour, the final say is with RW. The trend is that RW wants to go ahead with the project to collect a percentage like Basil did for the party expenses. The RW factor is the cause for RK to get Finance Ministry functions while he is Foreign Minister. It is common sense that while Harsha & Eran is available to carryout those duties, he wants RK who is a class one puppet of RW.

    As long as RW is holding the reign he should be held responsible for all the frauds committed by UNP ministries. MS appears clueless as to how to tackle the current crisis.

  • 4
    0

    Find who is behind this deal. Its said the particular deal maker can buy another JET. Hon. P.M the so called
    Mr. Clean should’nt allow his image to be tarnished any furthur. A 550 sgft house with bricks could be built
    at less than Rs.800,000/-. Look at the of houses built at Upper Kotmale Hydro project by CEB it was Rs.500,000.00 at that time. Sri Lanka has to saved from crooks. A heartiest congratulation to the Professionals. Whats the J V P doing only making noices.

  • 8
    0

    I am surprised that Mr. Chandra Jayaratne’s ‘timeline’ did not include the FR case I filed against Mr. Swaminathan, Arcelor Mittal & the Cabinet in this regard. Though it was thrown out as it was a ‘premature’ application since the contracts were not legally awarded at that time.

    But it is not over yet, intend filing a fresh case in the next few weeks,

    http://www.thesundayleader.lk/2016/09/19/double-jeopardy/
    http://www.thesundayleader.lk/2016/09/26/double-jeopardy-2/
    http://www.ft.lk/article/544967/Social-activist-alleges-irregularities–AG-says-tender-process-not-complete
    http://colombogazette.com/2016/10/15/supreme-court-dismisses-petition-on-65000-housing-project/

  • 5
    0

    creating apartheid era African suburbs ghettos in Srilanka North east with these ad hoc Houses. There is no vision of the future. Countires plan for 100 years ahead. Plan only about killing Tamils.

  • 5
    0

    poor people need 1 million Rs for the land and sand to get a 5 million worth of tin house

  • 4
    0

    The report here is very well researched. The Moratuwa University and Peradeniya University have released independent reports which voice similar concerns. However the Minister of Resettlement, Reconstruction and Hindu Religious Affairs D M Swaminathan is extra keen on the ArcelorMittal steel sheds. How come these sheds are not found in India? Is this how Swaminathan will protect Lankan Hinduism?

  • 3
    1

    The ultimate SHOWCASE OF SHAME of our Nation! Our government hierarchy (meant for the masses, by the masses, and of the masses) can seem to get away from the pandering of the rich foreign Lankan entrepreneur intent on making money for himself, and a name for himself in his local Lankan niche (usually within caste and class circles). Happened with tsunami funds too (usually with a top-notch American “benefactor” thrown in, to create the “long-term” investment goal – Buddhist Sasana prayers included). Try to speak against what is so obvious a fallacy, and one is demeaned. “The planet does not need more ‘successful people’. The planet desperately needs more peacemakers, healers, restorers, storytellers and lovers of all kinds” (Dalai Lama). As the article says, “brick houses built locally will generate employment, boost local enterprises and benefit the economy.”

  • 2
    0

    In the South about 300,000 people have no drinking water. Could these guys use their foreign bank account and have delivered some bottles water for those people?

    Buddha playing a game. This is going to be another “Help Hambantota”. Helpless people! This how he makes the richer , the richest.

  • 2
    0

    Correction

    poor people need 1 million Rs for the land and sand to get a 0.5 million worth of tin house

  • 2
    0

    we would like to know who are the bloody bastards who are trying to get the commissions and lock them up.The yahapalanaya seems to be just a reshuffling of the same cards.Now arjuna has also been sidelined and some people are getting ready to get their fat commissions from the chinese.

  • 1
    0

    I have to agree with Native Vedda when he says India OWNS and controls Sri Lanka. What you see going on now is Sri Lanka taking orders from India. Mahinda Rajapaksa tried to break from Indias control and had some limited success with the Chinese arrival. But even he was taken out by India eventually. It was India who ordered him to call the elections suddenly. And it was India who threatened him not to think of any military coup. Prabhakaran was arrogant and refused to take orders from India on more than one occasion and Tamil people paid with their lives for it. First time in the 1980s when India ordered the LTTE to lay down their guns. LTTE refused and the IPKF was sent in and they murdered god knows how many Tamil people on the Island. Once again in the early 2000s during the so called peace talks, India gave the orders for the LTTE to surrender and accept any proposal India put forward. Prabhakaran once again decided to defy India and we saw what happened a few years later. It is an open secret that Indian troops were on the ground using chemical weapons in the final war on the Island.
    India will get its karmic due. Infact it is getting it already. Natural disasters, farmer suicides, raging naxalite rebellion, raising militancy in Kashmir, caste violence on the rise and much more to come. Until India collapses totally, Sri Lanka will always be a puppet state of India.

  • 1
    0

    Recently Forces moved out of some areas in North. Some of our friends have moved in to their lands after about 27+ years and they are now rebuilding their houses…
    I was told that in fact government provided funding (Rs 700 000) to rebuild their houses. 7K $ per family was a good leasing deal for the government of SL for using private lands for 27 years! Anyway, I’ve seen some photos of those new houses and people have moved in and are now renovating their farm lands.
    I guess SL government doesn’t have enough funds to build 65K new houses (~ 50 M $ needed).
    Here comes the game of double dipping that is being played by Donner countries.
    International funding agencies always look for desperate clients for their investments. Initially they provided funding to buy arms. Once the war is over, they are now providing funding through their investment companies to rebuild the war affected regions!.
    Some funding managers are charging up to 50 M$ to bring another 50M$ to rebuild these houses!
    It seems this is the best deal currently available on the table to complete this housing project…
    This housing project is just one of 10 other double dipping projects that are currently being planned in North…. Is it the time for local investors to step in?

    • 0
      0

      The local investor won’t stand a chance with GoSL encouraging all these foreign “donations” albeit long-term investment projects to Americanize and civilize Lankan society. This is the very set of megastructures, not on the coast, but right in the middle of populous areas of our delicate and fragile island, that have caused the major flooding from the monsoonal rains.

  • 1
    0

    Man, what our local put out in paper was very rosy and beautiful but in practice when timely delivery with required quality of the product would determine every thing. It always good to encourage the locals but to keep them on their toes AcerolMittal should be in the secen. It’s an EU Based firm, all these commissions all bunkum, and they have to play by the rule else they would end up big shit. I used to lived in steel house for years in the Middles East, if built well, it would withstand all regers of the weather.

    • 0
      0

      The reason for the Government to award this protject to an Indian owned AcerolMittal even forgoing usual tender procedure warrants reasonable suspicion.<<<<< Who would prefer high cost re-fab steel houses over low cost eco-friendly concrete/brick houses?

  • 0
    3

    Why Sinhalse tax payers have to pay for the houses in the north. We should torch those houses. Even better if people are inside those houses when torching it. Budha would have done the same

    • 0
      0

      You idiot, Buddha is not for violence. You do not know Buddhism or Buddha.

  • 1
    0

    “Why is the Government opting for imported prefab houses, when brick houses built locally will generate employment, boost local enterprises and benefit the economy?”

    I suggested the same thing in 2009. There were thousands of young men doing nothing in IDP camps. They could have been employed in rebuilding houses and other infrastructure. Now 8 years later, we have some shady tender proposal that results in massive kickbacks for a select few.

  • 0
    0

    The government of India uses the self-help to build houses in the Northern & Eastern provinces of Sri Lanka. The government of Sri Lanka imports from the Indian Company Acelor Mittal, the houses for installation in the same areas at nearly double the cost of a similar size houses built on self-help basis. This will condemn the people involved to the opposition in the future.

  • 0
    1

    Why are they not building Buddhist temples in the north? It was 100 % Budhist in the north before the rise of LTTE who evicted the buddhist. In Myanmar, our bbudhist brothers killed the Muslim invaders. In Sri Lanka we are just being servants to Tamils and Muslims

  • 1
    0

    Thank you Chandra Jayaratne and all the professionals in making this report.
    Minister Swaminathan is only trying to please the rime Minister who gave him the job. – he is not acting according to his conscience.
    Has the Prime Minister given any ArcelorMittal house to those in the South? Pl let me know.
    Objections have been raised by so many for so long. Still the PM persists in trying to implement this.

    What does that show? Utter recklessness and rascalism.

  • 0
    0

    It is a trend with successive governments to have an unelected Colombo-based Tamil as a MInister to show the world they have a Tamil Minister but they are used to do dirty work.
    We can never solve the ethnic problem in Sri Lanka.

  • 0
    0

    Welcome to Hindia ! Welcome to ETCA !

    No matter how unsuitable, we will accept Indian terms, expertise and goods because our PM is keen to foster Good Relations with the US Stand-In in South Asia and distance ourselves from China and pivot to the West (even though everyone else is pivoting to Asia !)

    We Sri Lankans welcome this opportunity for Hindia to invest in our economy with items other than parachute drops.

    Jai Hind!

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