The Cabinet has approved a payment of Rs. 7.91 billion to China Harbour Engineering Corporation (CHEC) to settle a long-standing claim related to the Kottawa-Dodangoda section of the Southern Expressway, which was completed a decade ago.
Despite CHEC not following standard procedures, such as seeking recourse through the dispute adjudication board (DAB) as outlined in the contract, the government sanctioned the payment. The decision was made on August 27, and a settlement agreement was swiftly signed between Highways Ministry Secretary Ranjith Rubasinghe, acting as the Chairman of the Road Development Authority (RDA), and representatives from CHEC. However, the payment will only be disbursed based on the availability of funds. The exact breakdown of the payment, which has increased due to currency depreciation, remains unclear.
The 35-kilometer Kottawa-Dodangoda stretch, which opened in 2011, was funded by the Japan Bank for International Cooperation (JBIC), with Tokyo-based Oriental Consultants Co. Ltd. (OCCL) serving as project engineers. A dispute arose in the same year between CHEC and OCCL, with CHEC demanding payments for uncertified work, a claim rejected multiple times by the consultants and the project office.
Nimal Chandrasiri, who was the Director of the Southern Transport Development Project (STDP) at the time, stated that the claims were found unjustifiable and were denied on at least three occasions. Internal opposition to the payment also persists within the RDA. Under the contract, CHEC was required to take its case to the DAB within 28 days, but this step was bypassed. Instead, CHEC pursued direct negotiations, which critics have described as an attempt to bypass proper procedures.
In 2014, a committee led by then Highways Ministry Secretary R.W.R. Premasiri recommended payment, but no action was taken. Subsequently, in 2023, a new committee formed under another Secretary, M.M.P.K. Mayadunne, advised that the claim should be settled in line with the earlier recommendation. This was forwarded to the Cabinet under President Ranil Wickremesinghe, and following guidance from the Attorney General, the payment was approved.
The timing of the decision, just a month before the presidential election, has drawn criticism. An engineer, Gratian A. Peiris, has filed a public interest complaint with the Election Commission, raising concerns about the settlement’s proximity to the election.
Additionally, a Standing Cabinet Appointed Procurement Committee has requested the RDA Director General to investigate the delays in resolving the dispute with CHEC. They have questioned why, after CHEC submitted its final statement in 2018, the RDA failed to act or resolve the issue using the contractually mandated dispute resolution mechanisms.
