Uma Oya Multipurpose Project Cost Overruns & Tunnel Leak Villager Compensation
Ministry of Irrigation and Water Resources Management•Mahinda Rajapaksa Administration (2005–2015) / Subsequent Administrations
What Happened?
Strictly neutral, evidence-based factual reconstruction from state audit, parliamentary and court records.
Engineering, Procurement and Construction (EPC) contract executed in 2008 with FARAB Energy and Water Projects (Iran) for the Uma Oya Multipurpose Development Project.
Two reservoirs (Puhulpola and Dyraaba), 28 km of underground trans-basin tunnels, and a 120 MW underground hydroelectric power station.
Complete project within 5 years (by 2013) at an estimated cost of US$ 514 Million funded by the Export Development Bank of Iran.
International sanctions on Iran disrupted loan disbursements. During tunnel boring in 2014, unexpected massive groundwater ingress occurred, depleting local water tables, drying agricultural wells, and causing severe structural cracks in over 4,500 homes. Construction was delayed by over a decade and the Treasury had to fund the project directly from domestic budgets.
Final capital costs exceeded US$ 585 Million. Over Rs. 2,450 Million (Rs. 2.45 Billion) was paid in direct compensation to affected homeowners, alongside tens of millions of rupees in emergency potable water bowser supply operations.
The Auditor General confirmed that initial geological baseline studies were deficient, leading to predictable water ingress risks that escalated project completion costs by more than 14% and delayed power generation by eleven years.
The Original Deal
2008-04-28Foreign credit facility supplemented by Treasury funding.
Transfer 145 MCM of water to southeastern dry zone and generate 120 MW of electricity.
The Actual Cost
SourcedDocumented Financial Consequence
Asset completed and generating electricity; the financial loss is defined by the compensatory payments (Rs. 2,450 Million) necessitated by environmental tunneling failure.
Follow the Money: Uma Oya Multipurpose Project Cost Overruns & Tunnel Leak Villager Compensation
Ministry of Irrigation and Water Management
Executes contract with FARAB Co under G2G framework.
Audit Report
Procurement Process & Approvals
PARTIALLY COMPLIANT"Geological pre-feasibility study was incomplete prior to tunnel boring machine deployment."
Auditor General Observations
DAMAGE OR_LOSS"COST OVERRUN & COMPENSATION: Tunneling engineering failures caused extensive environmental drying and property cracks, necessitating Rs. 2,450 million in state compensation alongside an 11-year project completion delay."
Ensure rigorous seismic and hydro-geological surveys for all future underground tunneling infrastructure.
COPE Special Hearing on Uma Oya Tunnel Leak Disasters
Committee ordered expedited compensation for displaced families and independent international engineering review.
No court cases filed for this record.
No corruption charges documented.
Governance Context & Decision Authorities
Historical administrative record.
Approved EPC contract with FARAB.
Disbursed via the Badulla District Secretariat to affected residents.
No documented beneficiaries established in official judicial findings.
Sourced Chronological Timeline
Every milestone and date is indexed to verified state or judicial documentation.
Agreement Signed with Iranian Contractor FARAB
US$ 514 Million project approved.
Major Groundwater Ingress in Main Tunnel
Severe water leaks drain surface wells across Bandarawela.
Project Formally Commissioned
Power station and reservoirs opened eleven years behind original schedule.