Wednesday, April 6, 2016

Sri Lanka to review billion dollar ArcelorMittal tin house deal

ECONOMYNEXT - Sri Lanka will review a billion dollar deal to build 65,000 tax-payer financed houses by ArcelorMittal for homeless Tamil refuges in the island's former war zone, a minister said, amidst allegations of corruption and tender rigging.

"The President said he will form a committee with the Prime Minister and relevant ministers to go into this," Minister of National Co-existence Dialogue and Official Languages Mano Ganesan said.

Sri Lanka's government is being given a loan which can be repaid after a one-year grace period, which had not been offered by the next qualified bidder, Minister for Rehabilitation D M Swaminathan told parliament.

The so-called “tin houses” have come under fire for costing 2.1 million rupees when an Indian government was spending 550,000 rupees per house on a 50,000-houses  project for Sri Lanka's homeless.

The steel houses would also come with a solar panel and a gas cooker.

Tamil National Alliance legislator M A Sumanthiran said the Tamil people were very grateful for the government for wanting to give houses free of charge to the recipients, but a longer lasting house could be built with traditional materials for less than half the cost.

"The tender procedure itself has serious flaws," he told parliament two weeks ago. "I was told in August last year as to who was going to build the houses. I was told the name of the eventual builder.

"I have said this in public before. I will tell you where I was told; I was told on stage when His Excellency the
President came to hand over the land in Sampur (in the eastern Trincomalee)  in late August last year. 

A month later in September, a tender was called for and there were just 12 days’ time to bid on this 65,000-housing project. 

"All this is very specific and tailor-made for this ( ArcelorMittal). There are serious flaws and I do not want to place
all of them on record here".

Local media has reported that the local agent for the deal is a man on bail over pending cases, who has links with the ruling party. 

At a time when Sri Lanka was suffering a high debt burden, it would be possible to build 65,000 houses for 500 million dollars, instead of a billion US dollars, and save tax-payers money, he said.

"You also have a grace period; you do not start paying now; you start paying one year later. All that is true," he said.

"But, eventually, you have to pay. That is why I said this is also demonstrative of the larger picture. Borrow now at better rates; all that is true. 

"But, you have to pay eventually. You have a 10-year period to repay the whole thing. We
want the government to take a re-look at this. 

"We want the houses. Our people need the houses. But, we want it done in a way that will be acceptable not just for the recipient who will be thankful anyway but also for the society."

Sumanthiran said he had inspected a model house in Jaffna.

"Already that model house is coming apart," he said. The walls are moving apart. It is prefabricated. They have brought in the steel and they have fixed it. 

“Already a gap has come. I want to table this photograph of the gap that has already come in this model
house. It is beginning to move apart,” he said producing a photo of the model house. 

"The gauge is very small. There is some material which has been put in between two tin sheets, probably not to pass heat. 

"But if you shake it, it shakes. A stone house does not shake. I was scared to shake it harder because it might have made the wall collapse."

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