Compensating the Masses Replaced in Central Highway: How Unfair the Involuntary Resettlement Measured as a Buying and Selling Transaction?
Posted on November 1st, 2016

Dr. Chandana Jayalath

The topicality of Central Highway has been coming up and down since 2001, being a substantial source of rumors among the masses, particularly with regard to compensation. People were expecting replacement as same as the way done for the Southern Expressway. However, from time to time, the officials visiting the locations had been gathering deeds, survey plans, and so on, leaving nothing on how people should hope for a reasonable compensation. Grama niladaris were disseminating notices for mandatory participation for various meetings accompanying with a note that no participation means delay in compensation. While quoting some provisions in the Lands Acquisition Act, people have been receiving letters for trouble free access for the visiting officials to tree cutting, changing boundaries, excavation of soils, etc. With all these chronicles, the majority is pursuing, and indeed has a right to pursue, a fair valuation. They are desperate as to how their assets would be valued by the gentlemen who come to visit their assets and valuables. Their destiny is now being decided by the valuers and the members of the LAARC committee.

One recent example is Mirigama Divulapitiya road widening due to highway access. Those who have been residing either side of the road were given 15,000-30,000 Rs valuation per perch whereas the market price prevails in between Rs 200,000 to 250,000. Most frustratingly, these officials had never visited the locations to see anything physical. I consider it a matter of professional ethics and a serious lapse in their duty. As such, the Central Highway has created a threat to all over the places living adjacent to its alignment.  People have been in dilemma as to how much they may be compensated. The level of trauma has started upwards amongst the masses due to lack of proper guidance as to how compensation would be paid till recent times. Only three weeks ago, people received the compensation mechanism in writing and it lacks many elements fundamental to what is called just and fair compensation.

Times have therefore come to light for detail discussion as to how compensation is payable for those due to relocate in the Central Highway.   What is not addressed in the compensation scheme are basically the 4% of the deed charges in the purchase of new lands, 1% of the notary charges, standard surveyor fees, 7% architect fee for designs of new houses, 10% contingency for technical and financial variances, demolition charges if mandated by RDA for complete clearance of the site, charges for loss of coconut trees as recommended by the coconut development board for any development project (according to age and harvest), etc, and more importantly, a fair increment for the next few years (using a land index) in the case of artificial price hike up in the surrounding.

In the case of land prices, the government officials say, they will pay the open market price which is simply the price determined by demand and supply forces. Applying this theory in this classic case of involuntary resettlement is totally inappropriate. People oppose this way of compensation simply because this is not a buying and selling transaction. However there seems no single politician to listen to people’s concerns whereas the officials say it is a matter of government policy that can be fostered only through a Cabinet decision.  There will be public protests unless a reasonable decision is taken by the political arm spearheading this project. And, it is important we all must secure what we achieved hard without allowing chances for the political opportunism as typical in Sri Lankan politics.

It is natural that compensation is a sensitive issue when large scale private properties and settlements are being disturbed. Strictly speaking, the premise behind any compensation must be to recover any losses that bring the people, the suffered, back to the original position they stood socially and economically had there been no project. As such, it is imperative to have a matrix in place, similar to in other countries, that proposes the modality of compensation for all kinds of losses (e.g., dry land, vegetation, housing, businesses, and other income sources, temporary loss of income and moving costs). A matrix that sets out the standards for compensation will help avoiding any potential anomalies over compensation and unnecessary political interference. Since the policies of any typical international funding agencies is, at least, to maintain the level of living under ‘without-project’ situation, a strategy for maintaining their former standard of living needs must be considered a top priority.

The government should ensure that the common needs of the masses are fully met while the affected people are fully informed and closely consulted on resettlement and compensation options. They must be contacted nicely and humanely without any sphere of influence. It is natural that people affected by resettlement are apprehensive that they will soon lose their livelihoods and communities. Participation in planning and managing resettlement helps reduce any fear or obscurity and gives an opportunity to participate in key decisions that will affect their lives. Resettlement implemented without consultation leads to inappropriate strategies and eventual impoverishment. Consultation is fundamental in good governance, too. Without consultation, the people affected may oppose the project, causing social disruption, substantial delay in achieving targets or even abandonment, and cost increases. Negative public and media images of the project and of the implementation agency may also develop. With consultation, initial opposition to a project may be transformed into a series of ‘constructive’ participation, fostered by holding public meetings and identifying focus groups. Planners might draw on participatory problem-solving methods and the AGA’s being the government stewardship has a major role to play in this regard.

Compensation is therefore one of the key considerations the government authorities must be insightful. It is important that the matrix works on a fair and humane basis covering (though it is impossible to replace the mental agony and depression monetarily) the key cost components that are ascertainable scientifically. Such elements basically include replacement cost of housing, lands, crops and vegetation, loss of business opportunity, relocation costs, statutory fees and charges in procuring new lands, as well as professional fees for designing new houses. At least 7% of the total cost of construction will be charged by a chartered architect for his design services, for example. Coconut trees are badly affected in development and particularly in Colombo, Gampaha and Kurunegala districts. With regard to coconut trees, the Coconut Development Board has declared a table of compensation according to the age and annual yield. For example, coconut trees passing the age between 12 to 17 years yielding more than 80 coconuts a year will be valued at Rs 55,000.

It must be noted that the cost of a house ascertained merely on square meter basis with a ceiling budgetary restriction does not amount to a fair compensation. Costs depend on a myriad of factors such as type of construction, height and volume, number of rooms, type of finishes used, external amenities, locational factors, and so forth. They too influence the quality, workmanship and performance of these houses. In addition to that, there will be professional fees for design, supervision as well as fees for government agencies including stamp duties.

Land too has variables such as location, adjacent plots, local government payments, notary charges (usually 1% of the land value), stamp duties (4% payable to the government) etc. Should these amounts are a burden to the displaced eventually? It has also been a custom of the construction industry that a 10% contingency sum, over and above the estimated value of the house for example, is generally allocated for potential technical variances and price increases in future time. For lands, it is important and may of course be fair in all respects to take a value projected for at least the next 5 years so that any artificial price hike up due to highway could be accommodated within the compensation limit. In nutshell, it should be the value enough to replace the loss over displacement had there been no project. It is not the value of the property decided by demand and supply forces in a hypothetical market where there are large number of buyers and sellers. Replacement due to highway or any development project is not a result of a buying and selling transaction. It is simply involuntary resettlement where those replaced eventually meet the artificial price hike up in the surrounding.

As such, replacement cost is the actual cost to replace an item or structure at its pre-loss condition. This is typically distinguished from the actual cash value” payment which includes a deduction for depreciation. The term replacement cost or replacement value refers to the amount that an entity would have to pay to replace an asset at the present time, according to its current worth. This concept is different from the book value used by accountants in financial statements or for tax purposes. Replacement cost is the price that an entity would pay to replace an existing asset at current market prices with a similar asset (which of course, may vary from the market value of that specific asset, since the asset that would actually replace it may have a different cost). However, care must be taken that there are artificial price hike-ups in adjacent land properties. In whatever means, the compensation must be reflective of the foregoing considerations which will, if implemented logically and expeditiously, render social justice and human worth for those who scarified their ‘Urumaya’ (not just residence) on behalf of a nationally important project.

It seems however that the existing law or practice does not allow the valuers to take a holistic and acquiescent view and declare figures that are considered to be inclusive of the foregoing factors. Such a vacuum policy-wise would indefinitely hamper opportunities for people-oriented development initiatives. In true good governance, people should feel a governance system where social and economic priorities are based on broad consensus in society so that the voices of the people are heard in decision-making.

No development effort will be successful unless and until the people understand that they are for them. People should feel that they are empowered as it will impact the choices they make and increase their ability to participate in the political, social and economic forces. Officials visiting from time to time giving orders must be taught as to how they should speak and deal with the general public. The issue of compensation is still an issue burning under ash. I feel, it is time the politicians, officials and representatives from villages go together, work hand in hand, for a combined effort in making this national important project a reality without delay and community frustration. In nutshell, the value should replace the loss due to displacement and not the value of the property decided by market demand and supply forces. Undeniably, involuntary resettlement is not the result of a buying and selling transaction.

One Response to “Compensating the Masses Replaced in Central Highway: How Unfair the Involuntary Resettlement Measured as a Buying and Selling Transaction?”

  1. Dilrook Says:

    Apart from the compensation issue, road development should be looked at in depth.

    There are some key roads that must be expanded to induce more economic activity and cut down on the billions wasted in traffic congestion. Galle road from Bambalapitiya to Ratmalana, the road adjacent to port from Fort to Mattakkuliya, High Level road until Maharagama, Negombo road until Ja-ela and Kandy road until Kadawata.

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