By Maheesha Mudugamuwa
The Urban Development Authority’s (UDA) practice of spending millions of taxpayers’ rupees to maintain the Magam Ruhunupura International Conference Centre (MRICC), built a decade ago, has raised a myriad of questions as to why the State continues to keep afloat another loss-making facility.
The conference hall was constructed by the UDA and the Korea International Cooperation Agency (KOICA) at a cost of $ 20 million. Authorities now claim the facility is incurring huge losses as the initial development project planned for the deep south was not successful.
In a surprising revelation made at a recent meeting of the Parliamentary Committee on Public Enterprises (COPE), the officials from the Urban Development Authority (UDA) stressed that the authority had spent Rs. 75,889,769 from 2017 to 2019 for the MRICC but that it received only Rs. 15,896,360 as revenue for the same period.
At a time when the country is struggling to source foreign exchange to import essential commodities such as fuel, medicine, and food, the continued funding of a white elephant project, one that remains loss-making, is concerning.
UDA officials informed the COPE that the MRICC was one of the components of the Hambantota Urban Development Plan, but since the project was not successful as the major plan of the development project was not implemented, the facility continued to incur losses.
Furthermore, they informed the COPE that the MRICC was constructed on a foreign loan, and that UDA funds were not utilised for the project. They added that the UDA had acted only as a consultant for the project. In addition, the UDA informed the COPE that MRICC would be handed over to one or more private companies on a monthly rent basis to avoid incurring losses in future.
The MRICC, situated in a 28-acre plot of land in Siribopura, Hambantota, has 1,500 seats and three additional halls which seat 250 each. The conference hall is fully equipped with modern technical facilities and a vehicle park for 400 vehicles, and also has a helipad for helicopter landings.
The facility was built and opened for the public by former Prime Minister Mahinda Rajapaksa under his tenure as President in 2013. As learnt by The Sunday Morning, so far only one international conference has been held at this conference hall since opening in 2013: the Commonwealth Youth Forum (CYF).
However, responding to a query raised in Parliament by Samagi Jana Balawegaya MP Buddhika Pathirana on an earlier occasion, then Minister Gayantha Karunatilake informed Parliament that a sum of Rs. 3,868 million has been spent for the construction of MRICC. For the construction, a loan of $ 20 million had been obtained from the KOICA and the balance was provided by the Treasury.
However, it was reported that the income earned by the conference hall from 1 January 2015 to 31 December 2016 was only Rs. 8.35 million.
In 2019 the UDA, under the Ministry of Megapolis and Western Development, was planning to open up MRICC for tourists. In its development plan for the Hambantota Municipal Area (2019-2030), the authority had stated that the conference hall with international-level facilities was expected to provide opportunities for national and international events.
The authority in its plan had further stated that in order to accelerate economic development, the Hambantota Port Project was established as a key project along with the introduction of new development concepts, such as opening doors for international trade, industrial placement, multi-storied transport centres, the Southern Expressway Project, the Matara Kataragama Railway Project, the Mattala International Airport, and the Magam Ruhunupura Conference Hall.
By now, these projects have come into operation and Hambantota City has been proposed to be developed as a growth centre based on the port. The preparation of a strategic development plan has been identified as a priority, and accordingly, this plan will be effective from 2019 to 2030, it is stated.
Nevertheless, the UDA Deputy Director General informed the COPE that the construction of MRICC had commenced in 2009, completed in 2013, and that it was one component of Hambantota City Development Plan, which includes a port, an airport, industrial zone, and a tourism zone.
However, according to him, the UDA is currently in discussion with two IT-related companies to hand over the premises on monthly payment.
Further, he explained that the UDA was a consultant of the project and that the KOICA funds had been disbursed to a Korean company which directly engages in construction in Hambantota.
COPE looks at irregularities at UDA
The Parliamentary Committee on Public Enterprises (COPE) during a recent meeting, looked at several alleged financial irregularities of the Urban Development Authority (UDA).
The irregularities included providing Rs. 269.5 million to a private company in the year 2020 for the application of a blanket layer levelling 30×12 metres for the stabilisation of garbage dumps and for the installation of greenhouse gas emission units.
It was also revealed in the UDA’s Financial Audit of 2018 that the UDA had incurred an additional cost of Rs. 435,877,228 when signing a Memorandum of Understanding (MoU) with the Slave Island Rehabilitation and Mix Development Projects Developer; action had not been taken to include more favorable conditions to the authority. It had been agreed to incur the cost of the housing construction by the developer. As a result, the costs of water, electricity, sewage connection and construction of internal roads and drainage lines had to be incurred to the authority.
Furthermore, it was revealed that the construction works of the Jaffna Rest House with an extent of 3,118 square metres comprising 32 rooms, had been commenced near the lagoon without obtaining the approval of the Department of Coastal Conservation and Coastal Resource Management.
However, the construction works had been abandoned in the year 2016 after construction of the gabion wall and the foundation of the building. As a result, the opportunities to use this construction cost amounting to Rs. 77,488,989 for alternative work was lost by the authority. Further, it was observed in audit that the iron bars used for the concrete beams were decaying and as a result, the expenditure incurred thereon had become unproductive.
In its observations, the National Audit Office has stated that 24 significant observations relating to the unauthorised land acquisitions, action taken beyond the authority levels, leasing of properties violating the stipulated procedures, recovering of lease rents, land utilisation weakness, idle assets, uneconomic transactions, contract management and implementing of projects etc. had been reported in the preceding year’s audit reports. However, the authority had not drawn adequate attention for those audit paragraphs. The COPE had given their directions for some observations pointed out to the Committee.