Sri Lanka’s hunger for infrastructure is being fanned by a US$ 760 million loan from China that will cover several major road projects in both the north and south of the country, the Government said yesterday. Cabinet on Wednesday approved the hefty loan under a Buyers Credit Facility with the Exim Bank that would provide US$ 259.8 million of the US$ 305.6 million needed for four major projects.
The Exim Bank will provide 85% of the funds while the remainder will be supplied by the Government.
Media Minister Keheliya Rambukwella told the media at the weekly Cabinet briefing that another US$ 500 loan had been approved from the China Development Bank Corporation to improve and rehabilitate 1,174 km long main roads. This makes China Sri Lanka’s largest infrastructure development partner.
The Cabinet paper notes that a total of four projects have been earmarked under the US$ 259.8 million loan: Rehabilitating 67km of road in Karaitivu in Mannar at US$ 48.3 million; 113km of the Marichchikade in Mannar at US$ 73.2 million; 15km of the Southern transport development project from Pinnduwa to Kodagoda at US$75.1 million; and 15km from Kodagoda to Godagama and balance work on the Galle Port access road worth US$ 63 million are the four main components.
“A sum of US$ 158.2 million will be provided this year and the rest will be given in 2011 to finance these road projects. We are trying to encourage investors to go to these areas with infrastructure improvement,” the Minister noted, adding that the commercial contracts for the two northern road development projects were entered into between the Road Development Authority (RDA) and China Harbour Engineering Company on 17 October 2009.
The two packages for the southern transport development project were entered between the RDA and the China National Technical Import and Export Corporation on 11 June 2010. Four Buyers Credit Loan Agreements in sums of US$ 48.4 million, US$ 73.2 million, US$75.1 million and US$ 63 million will be signed with the Exim Bank for the above projects.
“The Government has 15 years including a grace period of three years to repay the loan amount,” the Minister noted.