Central Highway, Compensation and the Diminished Role of Valuers
Posted on September 23rd, 2016

Dr. Chandana Jayalath

Central highway has been coming up and down since four years, being a substantial source of rumors among the masses, particularly with regard to compensation. People were expecting replacement as same as the Southern Highway. However, from time to time, the officials visiting the locations have been gathering deeds, survey plans, and so on, leaving nothing on how people should hope for a reasonable compensation. Grama niladaris are disseminating notices for mandatory participation for various meetings accompanying with a note that no participation means delay in compensation. People have been talking each other, giving various mis-information. Some have received letters asking at any time they should allow tree cutting, changing boundaries, excavation of soils, etc, while quoting some provisions in the Lands Acquisition Act.  The majority is awaiting a fair valuation. They are desperate as to how their assets would be valued by the gentlemen who come all the way from Colombo. Their destiny will soon be decided by an individual at the end.

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 Rs valuation per perch whereas the market price shall prevail in between Rs 250,000 to 300,000. This is hell of a professional joke and I wonder whether officials have been given orders by politicians to do so. Most frustratingly, these officials had never visited the locations to see anything physical, which I consider it a matter of professional ethics and a serious lapse in duty. As such, the central highway has created a threat to all over the places living adjacent to its alignment. At any time, the direction and alignment can be changed not on technical grounds but political reasons. Central highway alignment had changes four to sixth time over the last three years.

People have been in dilemma as to how much they may be paid as compensation. The level of trauma has started upwards amongst the masses due to lack of proper guidance as to how compensation would be paid. In acquisition of properties and payment of compensation, however, government politicians are going to play a major role, which indeed be interesting to observe what would happen. 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 loss that brings 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, displacement and moving costs). A matrix that sets 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 to be of top priority.

The government should ensure that the common needs of masses are fully met. Indeed, the affected people should be 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. I would say, 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 constructive participation. Consultation can be fostered by holding public meetings and identifying focus groups, gauge their pulse and so on. 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, land, crops and vegetation, source of income, loss of business opportunity, relocation costs, statutory fees and charges in procuring new lands, as well as professional fees for designing new houses etc (6% of the total cost of construction will be charged by a chartered architect for his design services). Coconut trees are badly affected in development and particularly in Colombo, Gampaha and Kurunegala districts and 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 that heavily 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? 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.

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. A legal vacuum as such would indefinitely hamper opportunities for people-oriented development initiatives. In nutshell, good governance is the governance characterized by a couple of principles such as participation, consensus-orientation, accountability, transparency, responsiveness, effectiveness and efficiency, equity and inclusivity. Indeed, good governance is positively associated with improved oversight in contracts, government effectiveness, efficient bureaucracy, i.e. the service delivery, and rule of law leading to better economic performance and social life. Therefore, in true good governance, we have to feel a governance system where social and economic priorities are based on broad consensus in society and 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.

2 Responses to “Central Highway, Compensation and the Diminished Role of Valuers”

  1. Ananda-USA Says:

    Compensation at MARKET VALUE for land acquired through enforcing eminent domain law by government entities is ABSOLUTELY NECESSARY.

    Only such compensation can enable people deprived of their lands for the benefit of the public purchase alternative lands and homes for their use at the prevailing MARKET VALUE.

    Any compensation at less than MARKET VALUE is a GROSS INJUSTICE inflicted on Sri Lankan citizens!

    The government MUST NOT act in a HIGH-HANDED fashion agains defenceless people …. whatever Yamapalanaya or Yahapalanaya it calls itself!

  2. S.Gonsal Says:

    However, when this highway goes beyond Vaunia towards Kilinocchi compensation of land value of $100 per perch will have to be used, if not free , since the government has spend thousands of billions to restore peace in these areas.

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