Resettlement Ministry proposes Rs 2.1m steel prefab house while building Rs 800,000+ masonry house for itself
By Namini Wijedasa
Civil Society (CS) groups this week opposed a Cabinet decision to build 6,000 prefabricated (prefab) houses for war-affected families in the North and East, saying the people do not want them and that, the project will thrust the country further into debt.
Last week, Cabinet approved a Resettlement Ministry proposal to build 6,000 prefab steel houses in the North and East, “subject to the allocation of houses being made to the displaced families concerned, on receiving their consent for the same”. The balance requirement of housing for displaced families is to be met by constructing 10,000-15,000 traditional brick-and-mortar (masonry) houses per year.
The prefab houses are likely to be built by international steel giant ArcelorMittal (AM). The company first applied in 2015 to erect 65,000 of these dwellings. The proposal is backed by Resettlement Minister D. M. Swaminathan. But it has been rejected by a Cabinet Appointed Negotiating Committee; the Tamil National Alliance; the Northern Provincial Council; District Coordinating Committees; the Parliamentary Sectoral Oversight Committee; a team appointed by the Cabinet Committee on Economic Management; local officials and CS groups.
The Govt expects to take a dollar loan–the terms of which are not known– to pay AM for the import and erection of the prefab houses. And while the President, Prime Minister and Cabinet have repeatedly decreed that displaced persons must have a choice between a prefab house and a masonry one, the Resettlement Ministry has offered a Hobson’s choice.
CS groups called a press conference in Colombo on Friday, to strongly denounce the Cabinet’s decision to go ahead with prefab houses. Also present was Jacob Anthonipillai, a displaced man from Mannar, who had applied for a prefab house, in desperation at not having a permanent home.
“An application was given to people, but no explanation was offered whatsoever about these houses, their design or features,” he recounted. “Even Govt officials did not give any explanation.” The local village official said the application form was from the Resettlement Ministry and, if he wanted a house, he could fill it and hand it in. The people knew nothing about these houses, but feared that, if they did not apply, they would lose the chance to receive any type of housing.
Mr Anthonipillai handed in his application form. But he wrote at the bottom that his first preference was a brick-and-mortar house. Only if such was not available did he want a prefab one.
It was clear from the outset there were technical issues with the houses. “CS activists in the North looked at the needs of the people,” said former Chairman of the Ceylon Chamber of Commerce, Chandra Jayaratne. “They found a very clear preference for masonry–not prefab–houses, for technical reasons, reasons of heritage, family wealth, cultural compulsions and the need to pass the house down through generations.”
“We looked at the economics and finances,” he continued. “The prefab houses were first offered at Rs 2.1 million (not inclusive of taxes and duties) apiece. This was much more than other masonry houses built for Rs 500,000-600,000 apiece. More recent houses were constructed locally for between Rs 800,000 and Rs 900,000.
“This, compared with a Rs 2 million imported house, looked absurd in economic terms, value-for-value,” Mr Jayaratne said. More importantly, the purchases were to be in foreign currency.
“The package offer came with a 10-year repayment structure,” he explained. “They seem to have forgotten that, in 10 years, the Sri Lanka Rupee will undergo depreciation in currency terms.” For this and multiple other reasons, CS groups banded together and offered an alternative proposal to the Govt. It laid out a modality for the funds to be raised locally and for many more houses to be built for the price proposed by AM.
“We got an offer from a leading investment bank in Sri Lanka to raise the funds for this purpose,” Mr Jayaratne said. “The amount of money we were going to spend through AM could have built over 102,000 houses locally.” But the Resettlement Ministry disregarded the proposal.
CS groups made three demands: the Govt to immediately reconsider the decision to build 6,000 prefab houses; if the Cabinet has decided that 10-15,000 masonry houses are to be built per year, for the Govt to reserve money for it in the Budget; and to ensure the housing initiatives are done in conjunction with the affected people and CS.
“The proposed steel prefab houses have inadequate foundations, insufficient roof support, risk of steel corrosion, despite anti-corrosive coatings provided, and will probably be inadequate during high winds,” said Prof Priyan Dias, a structural engineer who, with three others, produced a report on the subject. They are also poorly ventilated, do not have a hearth and chimney and have poor or non-existent capacity for extension or repair. Crucially, they had a much shorter lifespan than a masonry house, and were at least double the cost.
“The masonry option had shortcomings but, not in the houses themselves. They needed sand and timber and take longer to erect. There was also no single agency to take such an initiative forward. However, the Govt could solve these issues,” Prof Dias said.
The Resettlement Ministry’s own masonry houses are being built at Rs 800,000. “It is a dilemma why a Ministry that is constructing such houses, wants prefab ones that cost twice as much,” he said.
Another concern raised was the modality of building the houses. “AM will import the houses,” said Niyanthini Kadirgamar, a researcher based in the North. “This means there will be very little, if at all, local labour used. A masonry house will involve both direct and indirect labour, and will provide stimulus for the local economy. Use of local products will bring income to local producers. Support services will be required.”
“The dollar loan to be taken to pay AM is dependent on foreign exchange rates. Last year, the Govt entered into an International Monetary Fund financing agreement citing “depletion in foreign reserves”. Taking yet another foreign loan will exacerbate the problem,” Ms Kadirgamar warned.
“Our proposal has a mechanism for the project to be funded locally, through Rupee bonds,” she pointed out. “Even if there is depreciation, we can reduce the cost the Govt will be spending on the loan itself.”
“Why has the Govt decided to import houses which can be built locally, at a cheaper cost, with great advantage to the economy as a whole?” she asked. “We really don’t understand the logic behind their decision. The initial decision to build 65,000 houses for the war-affected people was taken in 2015. The people have waited for two years. And people really want their houses.” She called on the Govt to implement a project to build masonry houses immediately.
Raga Alphonsus has lived and worked most of his adult life in the North. He said the housing needs of war-affected people were urgent and immediate. Delays have seriously affected their lives. Sri Lankans know how to build permanent houses. They have done it for generations.
“Most Sri Lankans build a house as a lifetime investment,” he observed. “They do not look for quick return on investment. The house is an important way to stabilise the family. This is common all over the country.”
“All we have to look at now is what the Resettlement Ministry has done last year and is continuing to do at present,” Mr Alphonsus said. “What are they doing? They are building a masonry house with a bill of quantities (BOQ) of Rs 800,000. People are very happy with the house. Interestingly, this house has more square area than the metal houses that are being discussed now.”
Such houses are cost-effective, have more square area, involve people in their building, can be expanded and handed down. There is local, easy maintenance. The prefab steel houses do not lend themselves to extension.
The President and Prime Minister have said they are committed to letting the people decide what type of house they want. “This has not been followed through,” Mr Alphonsus said. “People have not been consulted. They were not given the option of a masonry house.”
“They were given a form,” he said. “It just says prefab house and asks for by-the-way consent. Imagine the plight of a person on the ground–a person who is desperately in need of a house, who, at the moment, is disempowered and does not have the economic abilities to do anything by himself/herself. He/she gets a form and is told, ‘If you fill this, you will receive house. If you do not, we don’t know if you will ever get a house.”
“This seems to be a deliberate attempt to rush the project through; to get these metal houses done, rather than to take up the President’s directive to reach out to the people for their consent,” Mr Alphonsus said. Even Govt officials felt they did not have the information and were pressured into delivering the targets.