Sri Lanka’s govt cuts 30 pct cost on Chinese financed OCH3 through work scope reduction

May 21, 2015 (LBO) – Sri Lanka’s Highway ministry said that it has reduced the cost of Outer Circular Highway (OCH) phase 3 by 30 percent to 24 billion rupees through removing of the provision to expand to four lane road to six lanes in 2027.

However the ministry will stick to the Rajapakse Regime’s plan on four lane highway, but will not give nod to expanding OCH 3 to six lanes as it was based on traffic projection reports which the ministry says that have found been exaggerated during the initial planning stages. According to the traffic forecasts prepared during the former regime, traffic was expected to increase by 14 percent on average per annum from 2017-2022 and by 10 percent on average per annum from 2022-2027.
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The vehicle registration during that same period was expected to only increase by 6 percent on average per annum. The ministry appointed three member review committee on the project is of the opinion that a six lane highway would be underutilised and provisions for an expansion are an unnecessary accumulation of cost.

The removal of the provision to expand to six lanes will ensure a reduction in the cost of the construction of expensive structures such as the viaducts and embankments. “The committee, considering the expert opinion of a review panel appointed by the University of Moratuwa, found that the project under its current cost was economically unfeasible,” a statement said. “The committee is also of the opinion that the construction material, which was to be provided by the contractor, is between 20%-30% above market rate.” Due to contractual obligations signed by the former regime, the government will obtain the loan of 66.7 billion rupees from the Exim Bank of China. The savings accumulated from the reduction of the cost of this project would be redistributed into the upcoming road projects.