Ajit Kanagasundram

The Mahaweli Project – The Mother of All Development Schemes

40 years have now elapsed since the launch of the accelerated Mahaweli project, so it is an opportune time to look and review what was done and the benefits and shortfalls of the project to the nation. This project was the culmination of a 50 year long process that started with the rehabilitate ancient irrigation works and settlement of   dry zone lands that was initiated by our first Prime Minister DS Senanayake, when he was the Agriculture Minister in the State Council during the British Raj. After independence, this moved on to more ambitious projects building large multi-purpose schemes like Gal Oya and Uda Walawe culminating in the accelerated Mahaweli project.

I have written this article on the Mahaweli project from the published material available, the fragmented and haphazardly maintained records at the Mahaweli Authority (unlike the Gal Oya Board who kept meticulous records) and above all from the information and advice of my friend Professor Gerald Pieris. He was a serious postgraduate scholar at Cambridge doing a PhD under Professor Ben Farmer, and I was a playboy undergraduate when we first met over 50 years ago. I could not have written this without his help, but the opinions expressed and the conclusions are mine alone.

Let me give you a brief history of irrigation, colonization and land development. In the 1930s, DS Senanayake started the process of restoring old abandoned tanks and irrigation systems in the Dry Zone and settling Sinhala farmers from the Kandyan areas as colonists in the Anuradhapura, Pollonaruwa, and Kantalai areas. This was the central plank of DS’s policy and was done to alleviate the acute land hunger among Kandyan peasantry, whose ancestors had their lands confiscated (under the infamous Waste Lands Ordinance) for coffee and tea plantations after the Kandyan revolt of 1848. His objective was to create a nation of “self-sufficient, prosperous peasantry.” These irrigation, rehabilitation and settlement projects, although piece meal, were done at a very reasonable cost and can be considered a great success as is well documented in BH Farmer’s classic study – Pioneer Peasant Colonization in Ceylon.

When he became Prime Minster of an independent Ceylon in 1948, DS, became more ambitious and the result was the Gal Oya Project, whose history I have documented in an article in the Island newspaper last year. This project was a shining example of what can be achieved – all objectives were met, it was financed from our own resources and managed by Sri Lankans   and there was never any hint of scandal. It was a pity that at the end communal anti-Tamil riots marred the record but this did not diminish the achievement itself. This was followed by the Walawe project, Kantalai and other smaller projects. However dry zone development and colonization was in the Senanayake genes and Dudley Senanayake   revived the old dream of developing the resources of Sri Lanka’s largest river basin, the Mahaweli basin, during his period in office from 1965 to 1970.

Actually, this was an old dream. The ancients, who were master irrigation engineers, were aware of its potential of the Mahaweli but lacked the equipment to build dams and diversions on such a large scale in the hill country. There were some attempts to use the waters of the Mahaweli like the Minipe annicut that took waters 48 km to irrigate lands near Pollanaruwa (not to be confused with the even longer at 52 km Yoda Ela), and smaller works like Elahera and Nalanda Oya. The British under Governor Ward in the 1860s similarly constructed some small diversions but did nothing of any consequence. The SLFP government under Sirimavo from 1960 to 1965 also did the Maduru Oya Dam (ADB financed) and Polgolla dam but this was not part of any comprehensive plan.

Then under Dudley Senanayake’s government from 1965 to 1970 (an oasis of progress and sanity compared to what was to follow both under the SLFP and UNP), the project was revived and the UNDP and FAO were commissioned to do a comprehensive study. They produced a seminal report in 1969 which recommended a Master plan spread out over 30 years, covering not only the Mahaweli basin but the adjacent of Kala Oya and Maduru Oya (covering an estimated 40% of the country !), including 4 major dams, power generation of 470 MW and the clearing and irrigation of 365,000 hectares of land (900,000 acres) using the 6 million acre feet of available water. Further the plan envisaged that only 25% pf the land would be used for subsistence paddy cultivation but 55% would be used for cash crops and the balance for other uses like forestry – I will revert to this in my conclusion.  250,000 families were to be settled although no details of the modalities.

This report, which highly recommended the project on economic and social grounds projected an annual return of 15% on a capital outlay of Rs 6000 million – a very decent return for a project with social as well as economic objectives. Here was a project that would inspire the whole country, occupy the nation’s energy for a generation and transform our agricultural and energy sectors and the UNP seized on it eagerly. The Mahaweli project was launched, just before the 1970 elections, at a grand gala event, with dancers representing the mighty Mahaweli, and thousands in attendance. No doubt the UNP and Dudley Senanayake thought that this would win them the next election and in any sensible nation it would have. Instead the people preferred the SLFP promises of socialism, free rice from the moon, all this tinged with Sinhala chauvinism ( “Dudleygey badey masala vadey”  was an effective election slogan, referring to his failed attempt to resolve the ethnic issue with devolution ) and this won the day. The UNP under Dudley went down to a crushing defeat and the country was plunged into 7 years of hardship caused by misguided socialist policies, when they also degraded the single best economic asset left to us by the British, the tea plantations, through a misguided and badly executed nationalization policy. Nothing much on the Mahaweli was accomplished during these years. The only positive outcome of these 7 dreary, wasted years was that the population was finally disenchanted with the promise of an easy life under ‘socialism’ and this siren call will never be heeded again.

In 1977 the UNP under JR Jayawardane were returned with two third majority and a mandate to dismantle socialism and nepotism, and promised corruption free good governance and consequently earned the goodwill of the West. JR, who unlike the Senanayakes was not viscerally interested in agriculture and land settlement, nevertheless seized this opportunity and announced the Accelerated Mahaweli Project to be completed in 7 years instead of the 30 years as envisaged in the UNDP Master Plan. In addition, coasting on the Western goodwill generated by his election manifesto promising good governance and development (all these promises were in fact never kept), he negotiated grants and aid for the dams and power stations whose construction was to take place simultaneously not serially as originally envisaged.

The UK granted 140 million pounds and offered to build the Victoria Dam and power station, the largest dam in the project and the single largest foreign aid grant that the UK has ever given even to this day. Similarly, Germany and Sweden gave grants and soft loans and offered to handle Randenigala and Kotmale respectively. Never before had so much aid been offered on such generous terms to any developing nation– all they expected in return was for Sri Lanka to become a model of democracy, development and harmony as an example to other developing countries – these expectations were later shattered by JR’s communal policies culminating in the ethnic pogroms of 1983. However, the bold decision to compress a 30-year project into 7 years was the right decision and posterity will judge this as JR’s major (probably only) positive contribution to the nation.

JR appointed Gamini Dissanayake, a charismatic and energetic young MP, as the Minister of Mahaweli Development in a newly formed ministry and NEDECO, a Dutch engineering firm, was tasked to prepare the detailed implementation plan. Gamini was an excellent choice as he was intelligent, hardworking and had the ability to attract talent. Besides the main dams and power stations that were being built by foreign aid donors, all the Mahaweli Authority had to do was concentrate on downstream development like land clearing, building of irrigation systems and settlement. This they did energetically (at least at the start). The project had the following components:

–     A reservoir in Kotmale in the upper reaches of the Mahaweli mainly for storage and hydro-power

–     A large storage and power dam in Victoria in the middle-reaches

–     The Randenigala reservoir with German aid

–     Two other smaller downstream reservoirs

–     Maduru Oya was already being built with Canadian help

All the above was with foreign aid – the Mahaweli authority was responsible for land clearing, roads and settlement.

Settlement

The first area to be developed was System H at Maduru Oya and then System C. Each settler family was given 2.5 acres but unlike in the Gal Oya project there was no careful selection of colonists or post – settlement agricultural extension support and the agrarian pattern was very similar to that followed in earlier projects. In other words the colonists remained subsistence farmers dependent on paddy farming. There was no coordinated investment or effort to develop cash crops like fruits and vegetable production or create the necessary infrastructure like seed stations in model farms, storage cool rooms etc, in what the original NEDECO plan envisage for 55% of the area. There was no concerted effort to develop all the lands opened up – the System B has still not been fully developed to this day.

The number of colonist families settled is given below:

1979 to 1988  –       80,110

1989 to 1998  –       666401

(Prof Gerry Pieris – Challenges of the New Millenium)

The original target of 250,000 families will never be reached. Moreover there was insufficient follow-up for settled families. In Gal Oya there was a colonization officer for every 100 families and a record was kept of the farming practices and output of each family unit (this was used by the socio-economic survey that preceded the Farmer report). They were also given substantial agricultural advise to help with new methods, seeds and other inputs. There was no similar effort in the Mahaweli and the families were essentially left to their own resources and naturally replicated the subsistence farming patterns that was all they knew about.

Impact on Ethnic relations

One underlying motive of the settlement pattern was to change the demographics of the Eastern province, and it was clearly UNP policy laid down  by JR and energetically implemented by Gamini. In Systems H and C 90% of the settlers were Sinhala and 10% Muslim – there were no Tamils although the land was in the Eastern Province, a majority Tamil province.

The Tamil parties led by the TULF vigorously protested this plan as they claimed that it was in the historic ‘homelands’ of the Tamils. In fact this claim had no justification in history – the Jaffna Kingdom, for the few centuries of its existence, ruled only the Jaffna peninsula and the northern fringes of the Wanni. The Eastern province was part of the Kandyan Kingdom or at least paid tribute to it. The Tamils had settled only in a 10 mile malaria free coastal belt along the Eastern Seaboard and there were Sinhala settlements scattered thought the interior. These were no doubt the remnants of an earlier much larger population cluster. The Mahaweli project, a national endeavor, should have settled people from all over the country, and the majority had to be Sinhala to reflect the demographic distribution of the country. No, the injustice towards the Tamils was that they were not even given 15% of the land, to reflect their proportion of population in the country.

But by this time the Ealam war had started and the Indian government got involved in its ill-advised and ill-fated intervention. The result was an agreement with the Sri Lanka government enshrined in a document called Annexure C. This stated, amongst provisions for devolution, which were never implemented, that the settlers in the Mahaweli System were to represent the ethnic composition of the Island – ie 75% Sinhala, 15% Tamil and 10% Muslim. This was when the Reverend Divulugala Seelankara Thera , a maverick and hitherto unknown monk, came in. Secretly encouraged and supported by Gamini and his senior officials, and using Mahaweli Authority funds and transportation, he brought in thousands of Sinhala settlers, selected willy-nilly, to settle the lands that were to be reserved by Tamils. But this time Gamini had gone too far, and under Indian government pressure (well documented by the Indian High Commissioner Dixit in his book) the army was used to evict some of these settlers. The LTTE later assassinated this monk. But the Tamils were never settled in System B (the largest area to be settled) as this land was by now contested in battle with the LTTE and development work was obviously not possible. Thus, unlike in Gal Oya where they were treated fairly, the Tamils did not benefit from the Mahaweli project and, in fact, many were even evicted from their ancestral lands in the name of development. This went even for those Tamils actually displaced by the Mahaweli project.

Power Generation

This was the most successful part of the Mahaweli project. The hydro resources exploited by the project are :

Bowatenne              40 MW

Kotmale                  200 MW

Maduru Oya            40 MW

Plogolla Barage      40 MW

Randenigalla           135 MW

Rantambe                52 MW

Victoria                   210 MW

The power generated alone justified the capital expenditure on the project and protected the Sri Lanka economy from blackout during the oil price surges in the early 1980s. For many years Sri Lanka obtained over 50% of its power from Mahaweli, but this has now fallen to about 35% due to changes in the rainfall pattern and silting  in the upper reservoirs due to poor land use practices in the Kandy urban environment, particular excavations for building sites.

Corruption

In the Accelerated Mahaweli project, JR opened the floodgates to corruption on an industrial scale and this is one area where Gamini will be judged negatively by history. This was in stark contrast to earlier projects like Gal Oya where there was not even a hint of scandal. When my father was Chairman of the Gal Oya Board from 1951 to 1957 and building a house in Colombo, he would not even order building supplies under his own name fearing unsolicited discounts from suppliers! The LSSP youth paper at that time described many instances of corruption and favoritism in the Mahaweli projects. The joke that the Mahaweli had been diverted from Trinco to Finco had a lot of truth in it. Finco, a company owned by Gamini’s in-laws – the Weerasooriyas-  benefited from lucrative contracts, tenders and ‘consultancy’ projects.  So did the Maharjah organization – at least in this area of corruption the Tamils got their share! This is also documented by Gamini Irriyagolle, an erstwhile friend of Gamini, in his book the Truth About the Mahaweli. There were other examples. One Mudalali with UNP connections was given the monopoly contract to supply concrete cement for the project, without having to go through a tender process. At Rs 6000 tips per delivery in his fleet of 30 trucks he made a fortune, and furthermore he received a loan from Bank of Ceylon to buy the cement mixer trucks without having to supply collateral. He is a household name today and has diversified into other businesses like hospitals. The donors were aware of this but helpless to change it and it was widely rumoured that Gamini was one of the richest politicians in Asia in the company of Marcos  and Suharto.

Conclusion – the missed opportunity

While it is true that the reservoirs and power stations were completed on schedule by the donors, a project of this magnitude required the focused and undivided attention of the government in downstream development. In the absence of this, the potential of the areas opened (some of the most fertile in the Island) was never fully realized. It is easy to award mega contracts (and collect the kick-backs) but it is much harder to ensure that it effectively used to its full potential as was done in Gol Oya and Walawe. The land could and should have been used for high value added cultivation of vegetables and fruits in addition to paddy cultivation, but this required sophisticated methods and extension infrastructure for seed material and other inputs, for which there were no longer any funds or even interest by the government. Mere paddy cultivation was no longer attractive even for rural families by the mid 1980s – an average farmer getting 4 metric tons per hectare in 2 annual crops could expect to realize Rs 60,000 per annum. Far less than he could earn in cities as a 3 wheeler driver or security guard or in the Middle East. The answer, even now, is to raise productivity to the levels currently attained by demonstration farms in Sri Lanka (8 MT per acre), if not to the levels in Japan and Taiwan where farmers get 4 times the output from a hectare of paddy land. Unlike in the Gal Oya era in the 1950s when there was a great demand for the  paddy lands to resettle Wet Zone farmers, by the 1990s  land hunger had  eased and there were other options for village youth especially in the Middle East and in the cities. To this day the lands, especially under System B remain underutilized.

A short anecdote will illustrate this. A friend of my son in his early 30s and an investment banker in Singapore, decided to return to Sri Lanka to try his hand at large scale farming in the Mahaweli area. As he was well connected politically (his uncle was a Muslim MP from down south) he had no problems in acquiring the land. He had a Lebanese partner who was willing to invest and market the produce, and the soil was analyzed and found to be ideal for grapes. 500 acres were planned. However, after 3 years he returned to Singapore disappointed and disillusioned. The roads were terrible, impassable during the rains, and above all there were no storage cool rooms to keep the produce prior to air shipment. These are basic amenities that should have been provided by the Mahaweli Authority and its absence condemned an enterprising young man to failure. If he, with his wealth, foreign contacts and access to capital could not succeed, what hope is there for the ordinary Mahaweli settler

Today the Mahaweli Project has still not realised its full potential, partly due to the distraction of the Ealam war but mainly due to the lack of interest on the part of both UNP and SLFP regimes. Unlike in DS Senenayke’s and Dudley’s time the UNP under JR had no longer any real interest in peasant colonization, agriculture or creating a “Self – Reliant and prosperous” rural peasantry. For them the Mahaweli project a magnet for a foreign aid and an inexhaustible  fund for corruption (both JR and Gamini will be judged by history on this). Once these was attained they moved on to greener pastures like aviation which they could exploit for personal gain. The rich water and land resources of the Mahaweli basin were not fully used for the benefit of the nation. What a waste!! Entrepreneurs will find there is still good land available for agricultural projects, if they are not after a quick buck – agriculture requires patience and staying power. However much remains to be done from an overall economic perspective as the Mahaweli project merely created 80,000 settler families living just above the poverty line (see Thayer Scudders book – Large Dams and their Impact). We could and should have aimed higher. Take paddy production – our current average is 4 MT per hectare when government run model farms achieve 8 MT per hectare (still lower than Japan, Korea and Taiwan – though admittedly they have more sunlight hours in the summer).  If we had kept up the rate of crease that was achieved by Dudley Senanayke’s government from 1965 to 1970 when yields per hectare increased by 34%, we would have achieved self-sufficiency even without the Mahawelil lands. Dudley had the ‘Govi Rajah’ scheme to identify and encourage the best farmers in each district and all MPS had to participate. Dudley was even photographed in an ‘amudey’ (loin cloth) ploughing a paddy field, much to the amusement of Colombo sophisticates in their drawing rooms. But this was exactly the right policy to encourage and reward good farming practices. But after his time, all our leaders had other priorities and a golden opportunity was missed.

Mahaweli should have given us a surplus to export rice of the quality and variety demanded by foreign customers- Thailand for example exports 10 million metric tons per year giving a handsome return to their farmers. Also with fruits and vegetables – the original plan envisaged that 55% of the land would be used for this purpose but I doubt if we achieved even 10% of this. I am not talking about a cottage industry but a major export earner if we had done this seriously. Thailand for example exports over $ 3 billion worth of fruits and vegetables per year (up from $ 250 million ten years ago), over $ 1 billion to China alone (Bank of Thailand statistics). India’s exports of Mangoes alone are $1 billion (equivalent to all our tea exports) largely consisting of a variety called Alphonso that, in my opinion is inferior to our best Jaffna mangoes, from which we could have developed a breed to be planted in the Mahaweli zone. Our record in dairy production is also feeble, and I notice that we now import oranges from California and Israel. We no longer get the ‘panni thodang’ from Moneragala and Bibile that were the sweetest oranges I have ever tasted. We could have cultivated this on a large scale and it had the unique advantage of being green in colour rather than orange, and this would have helped create a brand. An Israeli expert on horticulture, Itzak Perry, got down by my father to advice on citrus cultivation in Gal Oya told him that not only was the entire Eastern Province suitable but that our so called ‘dry zone’ gets 4 times the rainfall of the Negev desert that the Israeli’s have made bloom. What have we achieved with our God given rich soils and abundant water? Quoting from a Dutch Embassy report of 2015 – Vegetable exports $37m, imports $392, fruit exports $212 million and imports $68 m – a net deficit of $160 million. This is where the future lies not in futile dreams of enormous FDI, building a Megapolis and becoming an international banking center.

Let us examine this last proposition for a moment and realise how unrealistic it is in a country where over 90% of government revenue goes on debt servicing. FDI for industry requires good infrastructure of industrial parks (we don’t have it), Ports (the only thing we do have), a pool of technically trained labour ( we have only 2 technical colleges and Singapore 6 and a nationwide apprentice programme, and cheap reliable electricity (a joke?). So there is nothing special about Sri Lanka and the only significant industry that we have created is garments which relies on cheap labour and foreign quotas.

As for becoming an international banking center it assumes that the world needs another one in addition to New York, London, Dubai, Singapore and Tokyo (and perhaps Frankfurt after Brexit) – and we do not have the necessary pre-requisites . First an ecosystem of lawyers, insurance specialists, technologists and workers fluent in English, good office space at a reasonable cost (space at the World Trade Center costs Rs 600 to Rs 900 psf/per month for a 20 year old building, while more modern office space in Changhi business park in Singapore rents for Sing $4.50 (equivalent to Rs 450 per sq ft/month). The most important requirement however is a judicial system with a track record of incorruptibility and impartiality (another joke?). Without this office space in expensively reclaimed land will not find tenants – I can say this with  30  years of banking experience in Singapore, where I was instrumental in setting up a global technology hub for Citibank in Singapore. Overall in technology alone there are now over 10,000 staff in high paying jobs.

I am tempted to paraphrase Bill Clinton’s famous aphorism when he won the 1992 Presidential election – “It is agriculture, Stupid.” We have been blessed with some of the best land and water resources and must learn to use it. To do this will not be easy and will require a multi-generational effort.  D S Senanayake’s ambition was to create a “self-reliant, prosperous peasantry:” – emphasize the word prosperous. If we do not follow this simple objective, our youth will continue to drift to dead end jobs in the cities as security guards or 3-wheeler drivers, and our girls to domestic servitude in the Middle East or work in the numerous hair salons that have sprung up, while moonlighting as “hostesses” to supplement their meagre income. The choices are stark but we have no option.