Govt. signs largest project loan with China

Finance Ministry Secretary Dr. R.H.S. Samaratunga and Chinese Ambassador Cheng Xueyuan at the loan signing  ceremony at the Finance Ministry yesterday 

• $ 989 m loan covering 85% cost for Central Expressway phase I from China EXIM Bank
• Full cost for first phase $ 1.1 b, Chinese company MCC given contract   
• Funding for phase III still pending, phase II funded by local commercial banks  
• First phase from Kadawatha to Meerigama, phase II will stretch up to Kurunegala  

The Government yesterday signed the single largest project loan with China for $ 989 million, which will be used to fund the first phase of the Central Expressway project, the Finance Ministry said yesterday. The $ 989 million loan is from the EXIM Bank of China for the Central Expressway Project Phase 1 from Kadawatha to Meerigama and will be at a concessional rate, a statement from the Finance Ministry said.

“The Government of Sri Lanka has accorded high importance to the development of infrastructure including the expressway network with interconnectivity as it will directly contribute to the economic growth and will have indirect effects in raising the productivity and efficiency in different economic sectors. To complement the existing expressway network, Central Expressway Project (CEP) has been initiated with a purpose of linking Colombo with Kandy and Kurunegala,” it added.

Section 1 of the CEP will start from Kadawatha where four expressways – namely, Outer Circular Highway (OCH) II, OCH III and Colombo-Katunayake Expressway and the Central Expressway – link through the Kadawatha interchange. 

This will create an uninterrupted connectivity from Hambantota to Katunayake or Hambantota to Kandy, linking several provinces and economically important ports, airports and commercial cities. This proposed highway will improve regional connectivity and efficiency for the entire expressway network.

.Accordingly, strengthening the financial cooperation between the Government and the People’s Republic of China in the field of the infrastructure development of Sri Lanka, the Export-Import Bank of China (EXIM Bank) has agreed to provide a concessional loan amounting to $ 989 million covering 85% of the contract price, for the Central Expressway Project – Section 1 from Kadawatha to Meerigama.

“The total estimated cost of the project is $ 1,164 million. Furthermore, this loan is the single largest loan approved by the EXIM Bank for Sri Lanka,” the statement said.      

Since, the implementation of the Section 2 of the Central Expressway has already been commenced with the financial assistance of local commercial banks, this loan facility from China EXIM Bank will facilitate the speedy implementation of Kadawatha-Meerigama section, ensuring the connectivity of the expressway network up to Kurunegala. 

Accordingly, the loan agreement was signed on 22 March by Finance Ministry Secretary Dr. R.H.S. Samaratunga, on behalf of the Government and Chinese Ambassador Cheng Xueyuan on behalf of the Export-Import (EXIM) Bank of China at the Ministry of Finance.

Chinese firm Metallurgical Corporation of China (MCC) was awarded the contract to build section one of the Central Expressway but the project ran into issues after loan approval was delayed. The Road Development Authority (RDA) subsequently told the MCC to begin construction using up to 7% of the project cost sourced from its own funds. 

The Government is expecting a second loan, also from China, to fund the second phase of the Central Expressway, which is under construction and due to be completed at the end of this year. Construction of the second phase is by local companies. 

Funding for the third phase of the Central Expressway is expected from Japan but that funding has also run into delays with Prime Minister Ranil Wickremesinghe scheduled to meet with the Japanese Ambassador on Friday to discuss the way forward.