Govt. at snail’s pace in project implementation

• Only 5 of 79 projects planned for completion in 2025 have actually been completed and handed over
• 96 ongoing government projects classified under “red code” for failing to meet expectations
• Out of USD 5,465Mn in foreign-funded contracts, only USD 500Mn has been paid

By Mangala Pavithrani

Only five out of  79 government construction projects,  earmarked to be completed in 2025, have been completed  and handed over, Sri Lanka Builders’ Association Chairman Susantha Liyanarachchi said.

He told the Daily Mirror that 21 government-funded projects, six foreign grant projects and 10 projects under local loans have been stopped halfway.

Liyanarachchi noted that although the 2025 Budget allocated Rs. 1,315 billion for capital investment in the construction industry, which is about four per cent of the GDP, there is no clear information on disbursements. 

He said the total allocation for the 79 projects is Rs. 3.3 trillion, with an additional Rs. 1.3 trillion added later. A total of Rs. 32.6 billion is due to be paid to contractors in the first quarter of 2025.

According to him, of the US $  5,465 million worth of major foreign-funded contracts that had been signed by September 2022, only US $ 500 million had actually been paid.

He added that while domestic projects have shown a progress rate of 71.93%, foreign-funded projects have recorded only 26.53% progress due to delays in receiving funds. A total of 96 ongoing government projects that failed to show expected results have now been marked under the red code.
 Despite most 2025 projects being stalled, Liyanarachchi said many new construction projects have been proposed for 2026.

The 2026 Budget includes Rs. 10,500 million for the Central Expressway Phase 3 (Pothuhera–Galagedara) and Galagedara–Rambukkana, and Rs. 66,150 million for Phase 1 (Kadawatha–Mirigama). It also allocates Rs. 1,000 million for the Kurunegala–Dambulla Road and Rs. 31,000 million for a five-year hospital modernisation plan.

 Liyanarachchi pointed out the Ratnapura Expressway project as an example of wasted public money. Started in 2014, it received Cabinet approval and had a selected contractor, but the project did not move forward as expected. The contractor has now claimed Rs. 14,000 million in lost profits.

He said Rs. 1,500 million has been allocated to acquire 25 km of land for the expressway from Kahathuduwa to Ingiriya. Although Rs. 9.4 billion was allocated in 2016 to acquire 2,910 plots of land for Phase 1, only 849 plots were actually taken over.

The Bank of Ceylon, which signed a loan agreement with the contractor, had also failed to pay Rs. 2,512 million by April 2022. As a result, the contractor has demanded compensation for its losses after the project was halted in October 2022.

Liyanarachchi said poor financial planning and weak management have caused large sums of public money to be wasted on construction projects.

He said the state expenditure for 2026 is Rs. 8,980 billion, while income is only Rs. 5,305 billion, leaving a deficit of Rs. 3,675 billion. He added that although the government earns Rs. 4,850 billion from taxes, the high tax burden is one of the reasons the construction industry has collapsed.

He said that small and medium-scale builders should be protected and given more opportunities in government projects in education, health, irrigation and rural roads. Proper financial planning is essential before starting construction work, he said, as mismanagement creates serious hardships for builders.

Liyanarachchi urged the government to introduce an amendment to the expenditure head of the Ministry of Construction to establish a programme to strengthen the construction industry.