Shameful waste

Wednesday, 15 December 2010 00:01 -     - {{hitsCtrl.values.hits}}

THE report by the Treasury that around 45% of the developments projects are behind schedule denotes that the time has come to take a serious evaluation of the path that the country is taking.

According to reports, of the 681 ongoing development projects, 300 are behind schedule and four have been halted altogether. It said that impediments to implementation continued to result in significant cost overruns.

The 681 projects, all above Rs. 50 million, have been allocated a total of Rs. 276.69 billion for 2010, but up to the third quarter of the year, only 53.59 per cent of the allocation had been disbursed, amounting to Rs. 148.29 billion.

Foreign sources are financing 215 of these projects while the Government is financing 466 projects. Rs. 213 billion is the allocation for foreign funded projects. The total value of the foreign funded projects is estimated at a little over Rs. 1.55 trillion. Ministerial changes and other impediments have resulted in slow progress and significant cost overrun as far as these projects are concerned, the Treasury pointed out.

As at the end of the third quarter of 2010, the budgetary expenditure for both recurrent and capital was Rs. 565 billion, or 60 per cent of the total budgetary allocation of Rs. 940 billion. Due to some changes in the subjects and functions assigned to some ministries, the utilisation of funds moved somewhat slowly during the third quarter. The report points out that the factors attributed to project delays were mainly due to procurement hurdles, land acquisition issues, shortage of raw materials and managerial and technical staff, poor performance of contractors and poor project designs.

It also pointed that poor coordination between utility agencies and delays in obtaining necessary clearance from relevant authorities such as the Central Environmental Authority, Geological Survey and Mines Bureau Services Ltd. and Coastal Conservation Department added to delays in project implementation.

For example, the augmentation of the Negombo water supply project had Rs. 500 million cost overruns due to original designs not being estimated accurately. The Colombo city electricity distribution project required additional funds amounting to Rs. 150 million to meet the cost overrun. The Trincomalee integrated infrastructure project required an additional Rs. 2.6 billion to meet the cost overrun. These are all massive amounts of money that the country has to repay.

These statistics scream for more accountability and transparency. The funds that are obtained by international monetary organisations and countries do not come for free. We, as well as the future generations of the country, will have to pay for these development projects. In theory, the idea to improve infrastructure and attract local as well as foreign investment sounds very attractive. However, infrastructure has a long-term payback capacity; so adding to the burden with cost overruns does not smack of logic.

Stronger monitoring mechanisms and watch on corruption is important in this regard. With allegations of corruption pouring in from the highest levels, it is difficult to imagine that these projects are running beyond budget without cause. Taking a strong stand against corruption and urging officials to conduct themselves honourably would be a great starting point to bringing development projects back on track.