By Maheesha Mudugamuwa The Central Expressway Project (CEP) is moving at a snail’s pace with several issues affecting the progress of the construction work. The Sunday Morning learnt that the new delays faced in Section I of the CEP were due to the delay on the part of the Government to meet some preconditions agreed on by both the Government and Export-Import Bank (EXIM Bank) of China to disburse 15% of the loan from the consolidated fund. Minister of Highways and Road Development and Petroleum Resources Development Kabir Hashim admitted that there was a delay in implementing the loan agreements that was already signed by the two parties for the construction of Section I of the CEP. He said the delay was mainly because both parties failed to reach an agreement on some condition put forward by China EXIM Bank. However, Hashim was hopeful of completing the final agreements within a month. “We spoke to the Chinese Ambassador and requested to expedite the process,” he said at a media briefing last week. The CEP, which was proposed as part of the Government’s transport network upgrade strategies, will eventually connect Colombo to Jaffna in a long-term, two-phase plan, commencing with an extension of the existing highway from Kadawatha to Dambulla, with a link to Kandy, under four stages of Phase I and later to Jaffna and Trincomalee under Phase II. A top official told The Sunday Morning that the loan was already dispersed by the Chinese bank after the loan agreement was signed in March this year, but the funds had not yet been released. The official said the Government should give assurance to the Chinese bank as the Road Development Authority (RDA) had exceeded its loan capacity. The guarantee should be given by the Treasury since there was no budgetary allocation or any other allocations in the supplementary budget. The required 15% of the loan amount was scheduled to be paid through loans obtained from Bank of Ceylon (BOC) and People’s Bank (PB). However, EXIM Bank needed a firm guarantee and only after the guarantee is given can the RDA obtain a loan from BOC and PB, the official stressed. Accordingly, a special discussion was held on 2 September between RDA officials and Ministry officials to discuss issues pertaining to CEP Section I. The loan agreement to provide a concessional loan of $ 989 million covering 85% of the contract price for CEP Section I from Kadawatha to Meerigama (Stage 1) was signed in March by Finance Ministry Secretary Dr. R.H.S. Samarathunga on behalf of the Sri Lankan Government, and Chinese Ambassador to Sri Lanka Cheng Xueyuan on behalf of EXIM Bank of China. The total estimated cost of the Stage 1 of Section I is $ 1,164 million. Delay in loan activation slows pace further However, Section I is currently under construction by local contractors at a very slow pace till the loan is activated. The construction work of the expressway was launched by the previous Government under the presidency of Mahinda Rajapaksa after laying the foundation stone at the Senkadagala entrance of the expressway in 2014. The estimated total cost was approximately Rs. 200 billion and the work was scheduled to be completed by 2018. However, after the new Government came into power in 2015, the expressway was renamed “Central Expressway” from its previous name “Kandy Expressway”. Prime Minister Ranil Wickremesinghe again launched the construction of the expressway by laying a foundation stone in February 2017, of which the first phase is expected to be completed in mid-2019. The four stages of the first phase are from Kadawatha to Meerigama (Stage 1), Meerigama to Kurunegala (Stage 2), Pothuhera to Galagedara – Kandy (Stage 3), and Kurunegala to Dambulla (Stage 4). In addition, there is a link road starting from Ambepussa to Meerigama that comes under Stage 2. Stage 3 of the project starts from the Hiripathwella Grama Niladhari Division (GND) of the Polgahawela Divisional Secretariat (DS) and ends at the Palu Kopiwatta GND of the Tumpane (Galagedara) DS. Stage 4 of the project starts at the Theliyagonna GND of the Kurunegala DS and runs through the DSs of Mallawapitiya, lbbagamuwa, Mawathagama, Rideegama, Melsiripura, and Galewela, and ends at the Mirisgoniya Junction of the Dambulla DS (crossing A06), according to the RDA. Pothuhera intersection causes further delays Elaborating on the construction delays of Section III of the CEP, Minister Hashim said the construction work of Section III was delayed as the Government could not agree on some conditions put forward by the Japanese contractor and the bank. Section III of the CEP will be built by Japanese Taisei Corporation with funds obtained through a loan from Japan’s Tokyo Mitsubishi Bank. “Currently, we have obtained the necessary advice from the Attorney General (AG). As of now, there are a few issues with regard to the conditions put forward by Japan’s Mitsubishi Bank,” Hashim said. Further elaborating on the land acquisition issues, the Minister stressed that 95% of the land acquisition process is already completed. “The process will follow the laws prevailing in the country. The evaluations done by the Japanese contractor were not sufficient and therefore, we cannot agree. Therefore, the AG’s Department is currently looking for solutions to these legal issues.” Meanwhile, as learnt by The Sunday Morning, the issues pertaining to the loan agreement between Sri Lanka and Japan had already been resolved, but a new issue had arisen as a result of the omission of an interchange in Pothuhera from Section III, which was included into Section I of the CEP, which is currently under construction by local contractors with local funds. “As the construction of Section III has been delayed, we removed the Pothuhera interchange from Section III and handed it over to Section II, which is being constructed by local contractors. As a result, the contract agreements with Japanese company Taisei will also have to be changed,” the Minister noted. A senior government officer told The Sunday Morning that the omission had been done without any proper analysis. It is learnt that all parties had come to an agreement on Thursday (12) at a meeting held with the participation of officials from the AG’s Department, External Resources Department (ERD) of the Ministry of Finance, Minister Hashim, and Minister of Development Strategies and International Trade Malik Samarawickrama together with the Japanese bank over the phone. The expected loan amount for the construction of CEP Section III is around $ 1 billion. According to the official, the construction of CEP Section III would have started if the construction plan had not been changed by Sri Lanka. A Japanese delegation will be arriving in Sri Lanka next month to prepare the required documents. However, the agreements would not be signed until the issues with regard to the construction plan are settled, he stressed. Local banks’ loan to facilitate precondition When The Sunday Morning contacted ERD Director General Priyantha Ratnayake, he said the Government had already signed the loan agreement, but there were some preconditions which the Government had undertaken to abide by. It has to disperse 15% of the loan amount from the consolidated fund. “We’re planning to sign another loan agreement with BOC and PB to cover that 15% portion. Also, there are minor contract deviations. We need to change some contract conditions in order to make that domestic loan, and those changes have already been forwarded to the Chinese EXIM Bank for their concurrence and soon after, we would be able to sign the local loan agreement,” he added. Elaborating on the progress of the loan to be obtained from Japan for CEP Section III, Ratnayake said: “There are minor issues in the loan agreement and we hope that we can finalise it without further delay. There are some contract issues from the RDA’s side. According to a recent Cabinet decision, they have taken out some activities pertaining to the Section III contract agreement and assigned it to Section II. That change has to be agreed upon between the contractor and the RDA.” Speaking to The Sunday Morning, RDA Chairman Nihal Sooriyarachchi said that there was no such delay on the part of the Government in Section I of the CEP. “The Chinese EXIM Bank should send us a Chinese contractor bank guarantee. I don’t think there is a delay on the part of the Government. We are awaiting EXIM Bank’s response,” he added. Highlighting the progress of Section III, Sooriyarachchi said: “We have come to the final stage, but there are a few issues to discuss further and be agreed upon.” However, the RDA Chairman was confident that those changes would be done soon. “Our Ministry will not sign anything which is detrimental to the country,” he added. photos PRADEEP DAMBARAGE, Saman Abesiriwardana