A tale of two dams and destruction of a national asset

The idea in the development process, particularly where developing countries are concerned, is to keep the cost of development as low as possible.

- BY SUNIL ABHAYAWARDHANA

That is why most developing countries have given priority to developing the heavy construction industry, as it affects the development of infrastructure. In some developing countries, until very recently, heavy construction had been a no-go area for foreign contractors.

First Major Development Project

The Gal Oya scheme was the first major development project in post-Independence Sri Lanka. As the country did not have the ability to construct such a large project at the time, the contract was awarded to a US company Morrison-Knudsen. The total cost of the project in 1949 prices was around $100 million according to information from Hansard. The contract itself was a cost-plus contract, where the contractor was paid for all expenses plus a fee for profit and risks.

The next major scheme was the Udawalawe project which was delayed due to many reasons, including the government's financing constraints. After the Gal Oya Project, the financial position of the government had deteriorated quite fast, which led to the 1953 Hartal and a change of government in 1956. In early 1961 the government took over the fuel distribution from the foreign companies without paying compensation. As most of them were US companies, the US government cut off aid and the World Bank stopped funding.

The government's finances were such that undertaking a major project like Udawalawe was difficult without external funding.

In the meantime, a local company, Ceylon Development Engineering Co. Ltd. (CDE), pioneered in the field of heavy construction. CDE was set up by the late Pin Fernando, long before the state organisations, and handled over a hundred projects, including contracts for the Irrigation Department and other government agencies. Some of CDE's projects included Chandrika Wewa, Pimburettawa, Rajangana (one of the largest projects it undertook with no foreign assistance was in the early 1960s), Bowatenna, Rathkinda and Inginimitiya.