By Lakshman Kiriella –
While I thank Mr. Rusiripala Tennakoon for raising 17 questions with regard to the tender procedure on Central Expressway (තවත් උණුසුම් සතියක් – මධ්යම අධිවේගී මාර්ගය හා තවත් කතා Colombo Telegraph – September 28, 2017), I must correct him on factual issues.
Question 1 – Is it true that the tenders have to be called only from the Japanese Contractors instead of calling public tenders, as the Japanese Government gives assistance?
Answer – When we obtain loans from the banks operated in foreign countries usually there is a condition that limited quotations from the contractors in those respective countries should be called. This condition is there in the case of the loan for the Section 3 of Central Expressway which was arranged with the intervention of Japanese Government from a private bank. At the stage of loan negotiations as well there has been an understanding between the two parties that the tender should be limited to Japanese contractors.
Question 2 – If it is so, what is the assistance received from the Japanese Government for this Project?
Answer – The loan was arranged with the intervention of the Japanese Government. The Embassy of Japan in Colombo played a key role in arranging this loan facility.
Question 3 – Is it not a loan obtained from Japanese Bank on Commercial Basis?
Answer – This cannot be considered as a full commercial loan as there are certain concessionary terms such as 6 years of grace period and 15 years of repayment period. Also annual aggregated cost of financing ranges from 2.02 to 2.22 (including Libor) percent according to the behavior of financial market. This annual cost of financing includes interest, annualized insurance, annualized commitment fee, arrangement fee and annualized agency fee.
Question 4 – If it is so, are the interest charged for the said loan and the re-payment schedule, so concessionary that one that cannot be obtained from any other commercial bank?
Answer – Currently, the rate of interest for this Yen loan facility is 0.95 percent per annum, whereas, the current annual rate of interest for commercial loans in the international market lies between 3 to 6 percent per annum for any dollar loan. On top of this, commercial banks would request the insurance, commitment fee, agency fee and other charges as well.
Question 5 – Before taking the decision was there a further fact finding report done?
Answer – Any external loan facility taken by Sri Lanka government is being negotiated by the Department of External Resources. With regard to this facility also there were several rounds of negotiations with the respective bank officials by the Department of External Resources with the participation of officials from the Ministry of Higher Education & Highways.
Question 6 – Can the Minister establish that no other commercial bank can grant an interest lesser than this rate, and a repayment schedule?
Answer – Currently, Japanese Banks are the banks which offer much lower interest rates when compared with commercial bank interest rates worldwide. However, channeling financial resources from a commercial bank to an outside country is a difficult task, if there is no backing of governments of those countries where the respective banks are established. Especially, it is further difficult to obtain a long term loan with a considerable grace period equal to the loan duration and grace period provided for this loan.
Question 7 – If there is no such special facility or concession, is there any special reason to open the tenders only for the Japan companies?
Answer – As per the above explanations you may understand that this loan is a special loan facility. If we open this to other bidders the Bank of Mitsubishi may not be interested in offering this loan facility to Sri Lanka.
Question 8 – Does the Minister have any other evidence to prove that there is a diplomatic involvement of Japan other than the letter sent by the Japanese Ambassador, saying that they honor the tender procedure in Sri Lanka?
Answer – Initially, the Japanese Embassy has nominated and recommended three contractors for civil works and three consultancy firms for providing consultancy services for this project. Subsequently they have proposed one more contractor to be included in the bidding process. However Japanese embassy has informed us the selection of bidders should be done through a competitive bidding process which is applicable to the consultancy service selection as well.
Question 9 – Why was the Minister trying to submit a letter of a consultant who advice the Japanese Government on certain matters, as the stance of the Japanese Government?
Answer – The advisor to the Cabinet of Ministers of Japan has submitted a letter on this matter and also another letter has been submitted by the Counsellor, Deputy Head of the Mission of the Embassy of Japan on the same matter. Therefore it has been considered as the view of the Japanese Government.
Question 10 – Is it not a cover-up the truth and misleading the public?
Answer – It is expressed as the reality.
Question 11 – Has an opportunity been given to a company which was once rejected by the Government Tender Committee to apply again?
Answer – At the initial tender process only one bidder out of the three bidders, who procured the bidding documents, submitted bid. However, this bidder had not submitted the bid security along with the bid. According to the Procurement Guidelines the entire bidding process was cancelled on the recommendation of the Procurement Committee due to the above lapse in the bid submitted by the single bidder. However, due to the reason for not submitting the bid security in the initial round of tendering, a bidder cannot be disqualified to submit its bid with proper documentation, at the subsequent invitations for bid. Accordingly, the same contractor has submitted its bid with the relevant bid security at the invitation for bid for the second time.
Question 12 – Why is the Minister asking to implement the expressway contract jointly with a company that was once rejected before, when the same tender was called and then deciding to award it to them the second time they applied?
Answer – There is no request from the Minister to implement this project with a rejected contractor two times.
Question 13 – Is it not an action which is in-compliance with the process of approving tenders in the country?
Answer – It has been decided to award this contract to the bidder who has been recommended by the Procurement Committee.
Question 14 – Why is the Minister Kiriella trying to quote a normal inquiry made by the Ven. Mahanayaka Theros on the construction of the expressway, as an influence being made to him to construct the expressway expeditiously?
Answer – Ven. Maha Sangha is interested in constructing the Central Expressway as soon as possible because currently it takes 4 to 5 hours to reach Kandy city from Colombo on a normal day. There have been considerable concerns from the Ven. Mahas Sangha Rathnaya and the general public in and around Kandy city as well as from other cities such as Kurunegala, Matale, Dambulla etc…
Question 15 – The Minister states that “The Prime Minister explained this matter for almost half an hour” and does this means that he dislikes to state something more than that?
Answer – This is to stress that the government has given priority for this project.
Question 16 – Does Minister Kiriella not accept the fact that the criticism of the media was raised after the so called lecture of half an hour was given by the Prime Minister?
Answer – Some media persons are having their own private agendas. They hide true facts and highlight half-baked information taken out of context to the public.
Question 17 – Does the Minister not accept the rights of the people to ascertain that there are no filling up the pocket of somebody or unnecessary interest or a repayment schedule which may be a burden to the country, when incurring such a huge public funds?
Answer – As the Minister, I and the entire government accept that the public has the right to know the information of the entire spectrum of matters related to this project. Not only has this matter, with regard to any other matter also public had the right to know all the information. That is why the Right to Information Act has been in enacted by this government.