The Cabinet of Ministers has approved four road contracts worth a combined Rs 9 billion, split between three construction companies, Cabinet spokesman and Health Minister Nalinda Jayatissa said.

Three are road development contracts and one is a post-Cyclone Ditwah repair contract, EconomyNext reported from the weekly Cabinet media briefing.

The awards

RR Construction (Pvt) Ltd took two of the four. The first covers widening and improvement between km 62+450 and km 70+000 of the Colombo–Ratnapura–Wellawaya–Batticaloa Road (AA004), at Rs 1,485.79 million inclusive of VAT. The second covers repair and improvement of the stretch from Madampe to km 30+000 — the section between km 15+000 and km 30+000 — of the Pelmadulla–Embilipitiya–Nonagama Road (A018), at Rs 3,739.84 million inclusive of VAT.

Maga Engineering (Pvt) Ltd was awarded the widening and improvement of the Haggala Junction to Katugastota section, km 3+000 to km 10+040, of the Peradeniya–Halloluwa–Katugastota Road (B365), at Rs 3,106.21 million inclusive of VAT.

ELS Construction (Pvt) Ltd takes the repair and improvement of three sections of the Nawalapitiya road, at Rs 763.98 million — quoted exclusive of VAT, unlike the other three.

The four figures sum to Rs 9,095.82 million, consistent with the Rs 9 billion headline.

Context

The awards come as the government tries to fix a chronic problem with spending the money it allocates. At the same briefing, Jayatissa said procurement cycles have been adjusted in the hope of using the full Rs 2,000 billion capital budget planned for next year. Only under 25 percent of this year’s Rs 1,340 billion allocation had been spent in the first nine months, Finance Ministry officials have said.

“Spending 100 percent might not be possible in this year due to various technical reasons. In some places there were issues with tenders; in some places there were issues in the procurement process,” Jayatissa said.

Not reported

EconomyNext does not say which of the four is the post-Ditwah repair contract. Two of them — the A018 Madampe stretch and the Nawalapitiya sections — are described as repair work, so the filing does not settle it. Nor does it name the losing bidders or the procurement committee that cleared the awards.

Update, 11 November: a second newsroom answers three of those questions — and contradicts the first on VAT

Hiru News carried the same Cabinet decision at 9.44 a.m. on Wednesday, and its account settles most of what the section above flagged as unreported. It also disagrees with EconomyNext on a point that changes what every figure in this article means.

The post-Ditwah contract is identified

It is the ELS Construction award. Hiru states that the Nawalapitiya road sections were damaged by Cyclone Ditwah and that the Rs 763.98 million contract falls under the programme to restore infrastructure damaged by the storm. The other three sit under the National Highways Widening and Improvement Programme, which Hiru totals at Rs 8.33 billion — consistent with the four figures already published here.

The approving committee and the proposing minister are named

The approvals were granted on the recommendations of the relevant Higher-Level Procurement Committees, on proposals submitted by Bimal Rathnayake, Minister of Transport, Highways and Urban Development. Hiru adds that the contracts went to the companies submitting the lowest qualifying bids after the national competitive procurement process and bid evaluation — which is the mechanism, though still not the losing bidders’ names.

Hiru also places the media briefing yesterday (10), dating the Cabinet decision itself to the weekly meeting earlier in the week.

The VAT contradiction

EconomyNext and Hiru state the opposite of each other. EconomyNext describes three of the four contract values as inclusive of VAT and only the ELS figure as exclusive. Hiru says plainly that the contract values given do not include value added tax — all of them.

This is not a rounding difference. At Sri Lanka’s standard 18 percent rate, whether Rs 9,095.82 million is a VAT-inclusive or VAT-exclusive total is a difference of roughly Rs 1.4 billion in what the Treasury actually pays. The two filings cannot both be right, and neither reproduces the Cabinet paper.

This desk is not reconciling them. The figures above are reported as each outlet gives them, and readers should treat the Rs 9 billion headline as a contract-value total of uncertain tax treatment.

Two reference discrepancies

Hiru supplies section lengths the first filing omitted: 7.55 km on the A004 stretch, 15 km on the A018 stretch and 7.04 km on the B365 stretch.