By Maheesha Mudugamuwa
Make or break talks are underway between Sri Lanka and Japan for a $1 billion commercial loan for Phase III of the Central Expressway project.
Highways and Road development Minister Kabir Hashim told The Sunday Morning that the External Resources Department (ERD) and the Attorney General’s Department are currently negotiating the terms of the loan agreement.
He said that the term of the contract for Phase III of the project ended on 4 March but the Japanese Embassy got involved and the discussions have now reached some sort of consensus.
“The ERD of the Treasury will negotiate the loan agreements. The ERD has to finalise the conditions and send it to the Road Development Authority (RDA). The Ministry is only facilitating the discussions and agreements,” he said, adding that the ERD had to vet the issues in the loan agreement as there were some provisions in loan agreement which were not discussed in the contractors agreement at the Ministerial or RDA levels.
“The ERD has to clear all those contracts with the Attorney General's (AG) Department and only then can the Ministry and RDA get involved,” the Minister noted.
The Japanese loan was not yet finalised as the Government of Sri Lanka refused to agree to the strict conditions that had been put forward by the Japanese Government and banks.
“The discussions held between the Japanese contractors, Ambassador, and banks ended without an agreement between the two parties and then the Attorney General’s Department got involved with the discussions,” Minister Hashim said.
However, the AG’s Department said that Sri Lanka could not agree to some of the conditions that had been placed by the Japanese Government, he added.
When The Sunday Morning asked what the Government would do if they could not reach a final agreement with the Japanese Government, Minister Hashim noted: “If this is not working, we will go for other options.
“But the issue is that it is very time consuming as the Government will have to call tenders again and the prices that we would have agreed on that time would now have escalated and you go at higher rates. We don’t want to delay this because Phase II is going at a very high speed. Phase III is very important due to interchanges that must come on time and there are some technical issues,” Minister Hashim said.
Meanwhile, when The Sunday Morning contacted the RDA Chairman Nihal Sooriyarachchi, he said that all the final details with the Japanese Government should be done by the Ministry and the Treasury.
“All these loan agreements are being finalised. It has come to the final stages but it has still not come to the RDA, because the RDA is the implementation agency. Once everything is sorted out, it will come to the RDA for implementation,” Sooriyarachchi said.
The agreements for Phase I of the Central Expressway project were finalised and the ERD had to transfer the necessary funds to the RDA, he added.
Make or break talks are underway between Sri Lanka and Japan for a $1 billion commercial loan for Phase III of the Central Expressway project.
Highways and Road development Minister Kabir Hashim told The Sunday Morning that the External Resources Department (ERD) and the Attorney General’s Department are currently negotiating the terms of the loan agreement.
He said that the term of the contract for Phase III of the project ended on 4 March but the Japanese Embassy got involved and the discussions have now reached some sort of consensus.
“The ERD of the Treasury will negotiate the loan agreements. The ERD has to finalise the conditions and send it to the Road Development Authority (RDA). The Ministry is only facilitating the discussions and agreements,” he said, adding that the ERD had to vet the issues in the loan agreement as there were some provisions in loan agreement which were not discussed in the contractors agreement at the Ministerial or RDA levels.
“The ERD has to clear all those contracts with the Attorney General's (AG) Department and only then can the Ministry and RDA get involved,” the Minister noted.
The Japanese loan was not yet finalised as the Government of Sri Lanka refused to agree to the strict conditions that had been put forward by the Japanese Government and banks.
“The discussions held between the Japanese contractors, Ambassador, and banks ended without an agreement between the two parties and then the Attorney General’s Department got involved with the discussions,” Minister Hashim said.
However, the AG’s Department said that Sri Lanka could not agree to some of the conditions that had been placed by the Japanese Government, he added.
When The Sunday Morning asked what the Government would do if they could not reach a final agreement with the Japanese Government, Minister Hashim noted: “If this is not working, we will go for other options.
“But the issue is that it is very time consuming as the Government will have to call tenders again and the prices that we would have agreed on that time would now have escalated and you go at higher rates. We don’t want to delay this because Phase II is going at a very high speed. Phase III is very important due to interchanges that must come on time and there are some technical issues,” Minister Hashim said.
Meanwhile, when The Sunday Morning contacted the RDA Chairman Nihal Sooriyarachchi, he said that all the final details with the Japanese Government should be done by the Ministry and the Treasury.
“All these loan agreements are being finalised. It has come to the final stages but it has still not come to the RDA, because the RDA is the implementation agency. Once everything is sorted out, it will come to the RDA for implementation,” Sooriyarachchi said.
The agreements for Phase I of the Central Expressway project were finalised and the ERD had to transfer the necessary funds to the RDA, he added.