The Basnagoda Reservoir Project – a key component of the Gampaha, Attanagalla, and Minuwangoda joint water supply initiative – has come under intense scrutiny following a report by the National Audit Office (NAO) revealing significant delays, financial mismanagement, and contract irregularities.
The project, initially valued at $ 229.5 million and scheduled for completion between 2014 and 2017, remains incomplete, raising serious concerns about its execution and oversight.
According to the NAO report, the National Water Supply and Drainage Board (NWSDB) and China Machinery Engineering Corporation (CMEC) had signed a contract on 15 May 2013 to implement the project.
However, the construction of the Basnagoda Reservoir, the project’s primary water source, has faced major delays.
To address these delays, the NWSDB and the Irrigation Department had signed two Memoranda of Understanding (MoUs) in March 2016 and June 2019.
The NAO has highlighted that the Cabinet-Appointed Procurement Committee (CAPC) had awarded the reservoir construction contract to Sinohydro Corporation Ltd. of China for Rs. 2,347,406,831, based on recommendations from the Technical Evaluation Committee (TEC).
The NAO report, however, has uncovered that the TEC had fraudulently inflated the bid by Rs. 254 million, resulting in the contract price being wrongly calculated at Rs. 2.347 billion.
This manipulation had occurred without proper clarification from the bidder, violating procurement guidelines, according to the NAO.
The report also pointed out that an overpayment of Rs. 50.8 million had been made to the contractor as a mobilisation advance in 2019 due to the inflated contract price. Despite this, no action has been taken to recover the overpaid amount or the interest accrued since 2019.
Furthermore, Rs. 401 million had been paid through 11 interim payments between 2020 and 2022, despite the project’s physical progress being only 17.09% as of October 2022.
The NAO has also revealed that CMEC, the main contractor, has transferred the responsibility for delays caused by subcontractors to the NWSDB, further complicating the project’s completion.
The initial project deadline of 2017 has long passed, with the completion date still uncertain and costs likely to escalate further.
However, when contacted, Irrigation Ministry Secretary Saman Pandikorala said there was a price escalation attached to the project, which had already been referred to the TEC and the Cabinet.
“The funds have to be allocated from the NWSDB and the ministry expects the issue to be solved soon. It is being processed,” he stressed.
When asked about the physical progress, the Secretary said that the project was 80% complete and currently supplying water to the NWSDB.
The Committee on Public Accounts (COPA) recently questioned officials about the increase of a contractor’s bid for the Basnagoda Reservoir construction project by Rs. 254 million, raising the total from Rs. 2,093 million to Rs. 2,347 million. This increase had been based on the recommendations of the TEC.
During a COPA meeting on 7 August, chaired by State Minister Lasantha Alagiyawanna, concerns had been raised about the Irrigation Department’s payment procedures, which were found to be inconsistent with Government financial regulations.
The committee had also noted that previous recommendations to correct these procedures had not been implemented.
COPA had recommended that officials take proper action to address these issues.
Source: the morning
