White elephants that gulp public money - Editorial

3 April 2013 06:30 pm - 0 - {{hitsCtrl.values.hits}}

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Building infrastructure is imperative for any country seeking economic development. Nobody will dispute that. But when the infrastructure built does not yield the expected economic outcomes, they would become a curse instead of a blessing. Further, if these infrastructure projects are carried out without consideration for the priorities at the time, they will grow to be white elephants that gulp public money, as opposed to springboards for economic prosperity.

We wonder whether this perilous fate is befalling on certain mega infrastructure projects undertaken by the government. It was not so long ago a country’s prominent transport economist pronounced that the much-touted Southern Expressway has been causing huge losses.

According to Dr. Amal Kumarage, who is considered an authority on transport issues in Sri Lanka, the annual revenue collected from vehicles using the Expressway is approximately Rs.1 billion, whereas the maintenance and debt service cost is around Rs.6.5 billion. Application of simple maths shows that the Southern Expressway is causing a loss of about Rs.5.5 billion annually.

We however feel that another one or two billion rupees should be added to the income earned from the expressway on the basis of the amount of fuel and time that is saved. Even after that the Southern Expressway seems to be incurring substantial losses.

It is true that the Rs.77 billion expressway was built on long-term foreign loans (20 to 40 years) with grace periods of five to 10 years for repayment. But at the rate the expressway is causing the loss of money, one can’t help wondering whether Sri Lanka’s first expressway makes economic sense. Pakistan who built expressways at a high rate, ultimately encountered a situation where they couldn’t maintain the expressways constructed.

The recently-built Hambantota Port also runs the risk of being a burden to the country’s economy, rather than a driver. The Sri Lanka Ports Authority said that the Hambantota Port fell well short of its revenue targets set for 2012. The port generated approximately Rs.132 million in turnover in 2012, falling well short of SLPA’s stated target of about Rs.500-600 million.

However, SLPA is optimistic about breaking even in 2015 with more investments being made at the harbour premises. Yet one cannot help wondering what happened to those lofty statements that the Hambantota Port was located on a very busy sea route and even if the port can provide water to the passing vessels it can make a profit!

Another mega infrastructure project that falls under this is the Norochcholai Power Plant or the Lakvijeya Power Plant. Since the day it started operations, the power plant came to points of standstill at numerous times due to technical failures. It was reported in the media that the government is now trying to negotiate a deal to sell the US $ 450 million power plant to the Chinese who build it. Again, where are those politicians who said with the construction of Norochcholai, Sri Lanka could sell excess electricity to India?

Though it’s premature to comment, Mattala Rajapaksa International Airport also has begun to show signs of falling into this category.

Considering all this, we urge the authorities to ascertain economic viability and identify the priority areas before embarking on mega infrastructure projects and not just to initiate projects wasting public money merely to appease their egos and vanity.

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White elephants that gulp public money - Editorial

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