Cabinet this week gave approval to award the construction of the Central Expressway Phase III to Japanese company Taisei Corporation, Cabinet co-Spokesperson Gayantha Karunathilaka said yesterday.
Running from Pothuhera to Galagedera, Phase III is 32.5Km in total and will be financed by a 100 billion yen loan, Karunathilaka said.
Prime Minister Ranil Wickremesinghe, as the Minister of National Policies and Economic Affairs, sought the approval of the Cabinet to award the contract to Taisei Corporation. The Cabinet also decided to approve the necessary preparatory work to immediately implement the project with Taisei Corporation’s own funding, on the basis of reimbursement of the expenses once the loan facility is obtained.
As per the agreement, the contractor is to carry out work with their own funds until the loan has been secured, and if the Government is unsuccessful in securing finances for the project within a year of signing the contract, the implementing agency (Road Development Authority) will repay the contractor for all the work done.
However, a loan facility has been negotiated with Bank of Tokyo Mitsubishi (BTMU) and Nippon Exports and Investment Insurance (NEXI) to finance the project. BTMU has been appointed by the Government as the Mandated Lead Arranger (MLA) to make financing arrangements for the project, through a syndicated yen loan from Japanese banks together with NEXI as the Export Credit Agency of the Facility.
The loan facility with 15 year tenure includes a four-year availability period and another two-year grace period, and is payable within nine years at an Effective Interest Rate (EIR) of 2.7% per annum, inclusive of all related costs.