Wednesday, March 18, 2015

The Dilemma facing many large project - subcontractors

I have been approached by many of these small subcontractors of projects that have recently been temporarily suspended.

For a short list, not extensive, they are the Port City, Northern Expressway, Kadawatha to Kerawalpitiya part of the Outer Colombo ring road, Lotus Tower, Defence Headquarters etc.

Apart from the Port City which is a China financed project, that is delayed due to serious environmental concerns that have not been considered in the initial awarding of the contract, to say nothing of new revelations, such as the no fly zone over the Project area! The others are due to gross over costing of projects.

As far as the subcontractors are concerned, they had made arrangements based on the continuation of these contracts, and taken on new leases of heavy equipment and dumpster trucks to transport sand, rocks and building materials. I was also informed that even a rock in Mawanella was earmarked for the Port City! I hope it was not the Saradiel one which we always look at from the Kandy road as kids and his antics were told us as folklore.  

Anyway the problem is for the 500 or so small contractors who claim to have voted for Maithripala Sirisena at the last election! They are now screwed. They have taken out leases on over 1500 vehicles, and staff to drive these vehicles and are now unable to pay their leases and salaries, and are gradually running out of resources, and the bailiffs are out to pick up the excavators, loaders, backhoes bulldozers tippers and such like.

What can the Government do in these instances? They cannot appeal to the leasing companies to give them a grace period, as those who are paying off their leases normally will shout that it is unfair to help the overstretched people looking to make a fast buck on expensive and lucrative subcontracts.

There is ONLY one solution, and that is to immediately review these contracts, reduce their costs dramatically, get them to agree to new terms, and resume operations, and here, the sub-contractors too should know that their terms will also be reduced, and their hoped for profits cut  to size.

I am concerned that in doing so there are a lot of untrustworthy politicians in this Government hoping to cash in on this hiatus to make some money for themselves, without looking at the national interest and good governance issues they have pledged. They will be the cause for any delay in resumption till their cut is given!

I hope that Mr Clean Prime Minister, will have the sense to employ trustworthy professionals to urgently renegotiate these terms and get back to business as we need to finish Kerawalpitiya to Kadawatha for starters and also the expressway to Kandy and at least to Anuradhapura leg of the Northern Highway. Lets do it, I am ready.         


Anonymous said...

Dance with the devil and you will get burned. I don't believe for a second that these subcontractors who were all part of a corrupt ponzi scheme with the people as the ultimate losers voted for good governance. Let them eat cake. Too many former subcontractors on former mega projects (read mahaweli) now rule the roost boasting billions in wealth which the state will not touch. At least don't let this new round of fraudster aspirants rise. If the government allows them in, be prepared to face the consequences from the people!

Anonymous said...

Hard to have sympathy for these subbies. It all depends on the contract they signed.

So if their revenue stream is not insured OR assured, and their leases are non negotiable, then whatever terms are in the lease when they fall behind must apply.

It is just the business is done.

Insurance is the only back up if it available and taken.

It is ripe for a new company to take over these equipment from the leasing companies at a discount, as the leasing companies will otherwise just lose value by parking them in open spaces left to the elements to rot in 6 months.

What a waste of the Country's imported items!

Anonymous said...

Aside from the Port City project that has really very serious concerns, especially environmental and to Colombo's ability to cope with over 250,000 people
The other projects should be immediately evaluated as a priority, and main contracts renegotiated, and upfront bribes disclosed before giving permission for a newly re written contract.

To take account of due process a minimum 2 months are required, by which time there will be an election campaign and things can change further.

So all pros and cons must be considered before making the final choice, as it is the money of the people of Sri Lanka we are talking about, and of kids yet to be born into this country who will have to pay for decisions made by people who would be long dead by then!!