New railway line from Matara to Kataragama delays due to malpractices

New railway line from Matara to Kataragama delays due to malpractices

21 August 2019 02:18 pm

The project of the construction of new railway line from Matara to Kataragama has been delayed compelling the government to pay Liquidated Damages, official sources said. 

The railway line project was launched on 01 August 2013 and the completion of the project had been planned for 31 July 2016. Due to failure in the completion of the project, it had been extended in three instances up to 26 October 2018.

The China Exhim Bank had granted US$ 278.2 million or Rs.36,155 million for this foreign financing project and a sum of Rs.28,093 million had been spent by 31 December 2017, government audit query revealed. 

The China Exhim Bank had delayed payment of US$ 83.46 million  for the construction of new railway line from Matara to Katharagama to the contractual company by 2 years and 06 months from August 2013, thus resulting a foreign exchange loss of Rs. 737.6 million.

Although the contract was due to be completed within a period of 48 months as required by the contract agreement, the Government had suffered a foreign exchange loss of Rs.36.5 million in consequence of extending the project periods in three times. 

Failure in Recovering Liquidated Damages In terms of Sections 8.7 and 14:15 (6) of the contract agreement for the construction of railway line from Matara to Kataragama, if delays occur in the constructions, liquidated damages of 0.1 per cent of the contract value should have been charged from the contractor in respect of every week followed by the scheduled date for the completion of the constructions. 

The contractor had delayed the completion of the constructions by 34 weeks as at 14 June 2018. Accordingly, liquidated damages of Rs.1,445.85 million should have been recovered from the Contractor, whereas it had not been recovered even by August 2018.