Sethsiripaya Phase III is set to resume as costs rise to Rs. 38.48 billion, with the Government approving a new contract to complete construction.
The Sethsiripaya Phase III construction project is set to resume after the Government approved fresh measures to complete the long-delayed state office complex.
The project was originally launched to address insufficient office space for state and semi-state institutions in Sri Lanka.
Construction began in 2021. However, work was later suspended because of economic instability, inflation and rising costs across the construction sector.
Only three floors had been completed when the project came to a halt.
Under the latest Cabinet decision, approval has now been granted to award a Rs. 25.58 billion contract to private construction company Maga Engineering to complete the remaining work.
Sethsiripaya Phase III Cost Climbs to Rs. 38.48 Billion
When authorities first planned the project, they estimated its total cost at Rs. 16.7 billion.
That figure has now increased to Rs. 38.48 billion.
The sharp rise reflects higher construction material prices, import restrictions and the economic instability that affected Sri Lanka during the intervening period.
The revised Rs. 38.48 billion estimate includes money already spent, the cost of remaining construction, additional project expenses, taxes and duties.
Financial experts say the near-doubling of the original estimate reflects the wider economic pressures that affected large-scale construction projects across the country.
The Government will also revise contract agreements and budget estimates as construction resumes.
State Institutions to Share Financing
The Government plans to use a joint-financing model to complete Sethsiripaya Phase III.
Under this arrangement, state institutions allocated office space within the complex will contribute towards construction costs based on the amount of space assigned to them.
Institutions expected to operate from the building include the Ministry of Power, the Inland Revenue Department, the State Pharmaceuticals Corporation and the Urban Development Authority.
Authorities expect this approach to reduce the financial burden on any single institution.
The model is also being presented as a practical way to complete the project without placing the entire cost on one state entity.
Project reports stress that large public-sector developments should now place greater emphasis on Return on Investment and long-term government efficiency.
However, Government sources say the decision to complete the project was also driven by the need to avoid wasting the substantial public funds already invested in the partially constructed building.
The renewed Sethsiripaya Phase III project will therefore test whether the Government can complete a major development delayed by the economic crisis while controlling further cost increases and ensuring long-term value for the state.
