Sri Lanka's Cabinet has approved a revised agreement with Maga Engineering to complete the suspended Sethsiripaya Phase III project, with the total estimated cost now placed at Rs. 38.48 billion.
The Cabinet has given approval for a revised contract with Maga Engineering (Pvt.) Ltd. to resume work on Sethsiripaya Phase III, a government office development project that stalled after initial construction began in 2021. The Urban Development Authority (UDA) had launched the initiative to address office space requirements of government and semi-government institutions.
Construction on the project progressed to completion of three floors before being halted due to multiple economic challenges. According to officials, work stopped because of macroeconomic instability, material shortages, import restrictions, and escalating construction expenses. The original project estimate had been Rs. 16.7 billion.
The revised agreement incorporates a new financing model in which participating institutions will contribute financially based on the office space allocated to them. The Ministry of Energy, Inland Revenue Department, State Pharmaceuticals Corporation, and the UDA have been identified as primary occupants. The revised total project cost, including previously incurred expenses and remaining work, now stands at Rs. 38.48 billion. Maga Engineering will complete the outstanding construction for Rs. 22.76 billion, though the Cabinet-approved contract value totals Rs. 25.58 billion when factoring in completed work and outstanding payments.
Government officials have emphasized the importance of expediting project completion to meet the pressing office space needs of state institutions. The contractor's revised proposal maintains the original scope of the development without structural modifications.
