By Maheesha Mudugamuwa
The Central Expressway Project (CEP), which has already seen long delays, has now been delayed further with funding for the completion of Section II of the project yet to be approved, The Sunday Morning learnt.
Section II of the CEP from Meerigima to Kurunegala is being constructed by local contractors and funded by local banks. It was due to be completed in November this year, but has now been delayed till May next year.
Road Development Authority (RDA) Chairman Nihal Sooriyarachchi told The Sunday Morning that steps had been taken to obtain a Rs. 60 billion loan to fulfil the balance payment of the Rs. 137 billion project.
However, the obtaining of the guarantee for the loan by the RDA was still uncertain as the guarantee needed to be provided by the External Resources Department (ERD) under the Ministry of Finance and the Treasury.
Initially, the Government’s plan was to complete the construction of the CEP, which consists of four phases, by the end of 2019. The construction of the 37.3 km stretch from Kadawatha to Meerigama under Phase I was delayed due to an issue in finalising the loan agreements between Sri Lanka and China.
The Sunday Morning reported earlier that the Chinese loan had not yet been granted to Sri Lanka as the Government was yet to fulfil its commitments under the deal. The construction of Phase III was delayed by almost four years as the two parties, Sri Lanka and Japan, could not agree on the conditions. Phase IV was to be constructed by China, but no agreement is signed as yet for the construction.
Loan security
Meanwhile, The Sunday Morning learnt that the Ministry proposed that the annual toll collections from the other expressways could be used as security in obtaining the loan as the Treasury refused to provide guarantees for the loans of the authority as the total allocations for the year had already been utilised by the authority.
A senior official of the RDA said that the loan would be utilised to pay compensation for the land acquisition of Sections I and II of the CEP and the outstanding payments of Section II.
“There is nothing wrong with obtaining a loan from state banks as the project was to be funded by them. But the issue is whether the security they are planning to deposit is the annual toll collection from the other expressways or not,” he stressed.
When asked whether the loan is being obtained due to the delay in obtaining loans for the construction of Sections I and III, he explained that the foreign loans had nothing to do with the construction of CEP Section II and that there were no links between the loans and the loan that is to be obtained from state banks.
Highways and Road Development Minister Kabir Hashim told The Sunday Morning that Section II of the CEP was to be funded by Treasury and since there was a delay on the part of the Treasury due to the allocation limitations, the RDA had decided to obtain a loan from local banks on the condition that the loan amount would be reimbursed by the Treasury from the next year’s allocation.
“We couldn’t wait for any delays. The RDA has its own borrowing limit and based on that, the RDA will take a loan and support Section II on condition that the Treasury will reimburse that from next year’s allocation,” he said.
Section II of the Expressway commences from Meerigama and leads up to Kurunegala with a link at Ambepussa, with a total length of 39.29 km. This section includes the Meerigama, Nakalagamuwa, Dambokka, and Kurunegala interchanges. The design speed of the road is 100 km/hr. The whole trace of CEP Section II falls on flat terrain.
CEP Section II has been divided into four sections with each already awarded to contractor consortiums. These contractor consortiums were selected from a set of prequalified local contractors.
Awaiting local allocations
Meanwhile, The Sunday Morning learnt that the delays faced pertaining to Section I of the CEP was due to a delay on part of the Government in meeting the preconditions agreed upon by both them and the Export-Import Bank (EXIM Bank) of China to disperse 15% of the loan from the consolidated fund.
A top official told The Sunday Morning that the loan had already been dispersed by the Chinese bank after the signing of the loan agreement in March this year, but the loan was yet to be activated.
“Only around Rs. 15 billion has been dispersed by local banks and there is a balance of another Rs. 17 billion to meet the necessary 15%,” he stressed.
According to him, the Government should provide assurance to the Chinese bank as the RDA has exceeded its loan capacity. The guarantee should be given by the Treasury since there was no budgetary allocation or any other allocations from the supplementary budget pertaining to this.
The required 15% of the loan amount was scheduled to be paid through loans obtained from Bank of Ceylon (BOC) and People’s Bank.
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 was signed in March by Finance Ministry Secretary Dr. R.H.S. Samaratunga on behalf of the Sri Lankan Government and Chinese Ambassador Cheng Xueyuan on behalf of the EXIM Bank of China. The total estimated cost of the project is $ 1,164 million.
Never-ending talks for Section III
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. The project was initially a part of the proposed “Expressway Network of Sri Lanka” and was named the “Kandy Expressway”.
However, after the new Government came into power in 2015, they renamed it “Central Expressway”. Prime Minister Ranil Wickremesinghe then again launched the construction of the expressway by laying a foundation stone in February 2017 with the first phase 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 Division (DSD) and ends at the Palu Kopiwatta GND of the Tumpane (Galagedara) DSD.
Again, Stage 4 of the project starts at the Theliyagonna GND of the Kurunegala DSD and it runs through the Mallawapitiya, lbbagamuwa, Mawathagama, Rideegama, Melsiripura, and Galewela DSDs, and ends at Mirisgoniya Junction of the Dambulla DSD (crossing A06), according to the Road Development Authority (RDA).
Meanwhile, The Sunday Morning learnt that negotiations for Section III of the CEP, which is to be constructed by Japan, had also failed to reach a consensus due to issues pertaining to the loan conditions.
As learnt by The Sunday Morning, the loan conditions related to jurisdiction and bribery were still being discussed by the two parties. Another condition being discussed was an incident where Sri Lanka wanted to remove the contractor from the project, which brought up concerns that the loan would be stopped by Japan and further concerns that the amount that was dispersed until that period would also have to be repaid.
The sources stressed that it doesn’t seem the project would see the light of day as the discussions were being stalled without any progress. “The Government should have the right to remove the contractor if they are not satisfied and with this condition,” he added.
The expected loan amount for the construction of CEP Section III is around $ 1 billion. Section III of the CEP will be built by Japanese Taisei Corporation with funds obtained through a loan from Japan’s Tokyo Mitsubishi Bank.
photo pradeep dambarageCentral Expressway : Hit by fresh delay
20 Oct 2019
Central Expressway : Hit by fresh delay
20 Oct 2019
By Maheesha Mudugamuwa
The Central Expressway Project (CEP), which has already seen long delays, has now been delayed further with funding for the completion of Section II of the project yet to be approved, The Sunday Morning learnt.
Section II of the CEP from Meerigima to Kurunegala is being constructed by local contractors and funded by local banks. It was due to be completed in November this year, but has now been delayed till May next year.
Road Development Authority (RDA) Chairman Nihal Sooriyarachchi told The Sunday Morning that steps had been taken to obtain a Rs. 60 billion loan to fulfil the balance payment of the Rs. 137 billion project.
However, the obtaining of the guarantee for the loan by the RDA was still uncertain as the guarantee needed to be provided by the External Resources Department (ERD) under the Ministry of Finance and the Treasury.
Initially, the Government’s plan was to complete the construction of the CEP, which consists of four phases, by the end of 2019. The construction of the 37.3 km stretch from Kadawatha to Meerigama under Phase I was delayed due to an issue in finalising the loan agreements between Sri Lanka and China.
The Sunday Morning reported earlier that the Chinese loan had not yet been granted to Sri Lanka as the Government was yet to fulfil its commitments under the deal. The construction of Phase III was delayed by almost four years as the two parties, Sri Lanka and Japan, could not agree on the conditions. Phase IV was to be constructed by China, but no agreement is signed as yet for the construction.
Loan security
Meanwhile, The Sunday Morning learnt that the Ministry proposed that the annual toll collections from the other expressways could be used as security in obtaining the loan as the Treasury refused to provide guarantees for the loans of the authority as the total allocations for the year had already been utilised by the authority.
A senior official of the RDA said that the loan would be utilised to pay compensation for the land acquisition of Sections I and II of the CEP and the outstanding payments of Section II.
“There is nothing wrong with obtaining a loan from state banks as the project was to be funded by them. But the issue is whether the security they are planning to deposit is the annual toll collection from the other expressways or not,” he stressed.
When asked whether the loan is being obtained due to the delay in obtaining loans for the construction of Sections I and III, he explained that the foreign loans had nothing to do with the construction of CEP Section II and that there were no links between the loans and the loan that is to be obtained from state banks.
Highways and Road Development Minister Kabir Hashim told The Sunday Morning that Section II of the CEP was to be funded by Treasury and since there was a delay on the part of the Treasury due to the allocation limitations, the RDA had decided to obtain a loan from local banks on the condition that the loan amount would be reimbursed by the Treasury from the next year’s allocation.
“We couldn’t wait for any delays. The RDA has its own borrowing limit and based on that, the RDA will take a loan and support Section II on condition that the Treasury will reimburse that from next year’s allocation,” he said.
Section II of the Expressway commences from Meerigama and leads up to Kurunegala with a link at Ambepussa, with a total length of 39.29 km. This section includes the Meerigama, Nakalagamuwa, Dambokka, and Kurunegala interchanges. The design speed of the road is 100 km/hr. The whole trace of CEP Section II falls on flat terrain.
CEP Section II has been divided into four sections with each already awarded to contractor consortiums. These contractor consortiums were selected from a set of prequalified local contractors.
Awaiting local allocations
Meanwhile, The Sunday Morning learnt that the delays faced pertaining to Section I of the CEP was due to a delay on part of the Government in meeting the preconditions agreed upon by both them and the Export-Import Bank (EXIM Bank) of China to disperse 15% of the loan from the consolidated fund.
A top official told The Sunday Morning that the loan had already been dispersed by the Chinese bank after the signing of the loan agreement in March this year, but the loan was yet to be activated.
“Only around Rs. 15 billion has been dispersed by local banks and there is a balance of another Rs. 17 billion to meet the necessary 15%,” he stressed.
According to him, the Government should provide assurance to the Chinese bank as the RDA has exceeded its loan capacity. The guarantee should be given by the Treasury since there was no budgetary allocation or any other allocations from the supplementary budget pertaining to this.
The required 15% of the loan amount was scheduled to be paid through loans obtained from Bank of Ceylon (BOC) and People’s Bank.
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 was signed in March by Finance Ministry Secretary Dr. R.H.S. Samaratunga on behalf of the Sri Lankan Government and Chinese Ambassador Cheng Xueyuan on behalf of the EXIM Bank of China. The total estimated cost of the project is $ 1,164 million.
Never-ending talks for Section III
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. The project was initially a part of the proposed “Expressway Network of Sri Lanka” and was named the “Kandy Expressway”.
However, after the new Government came into power in 2015, they renamed it “Central Expressway”. Prime Minister Ranil Wickremesinghe then again launched the construction of the expressway by laying a foundation stone in February 2017 with the first phase 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 Division (DSD) and ends at the Palu Kopiwatta GND of the Tumpane (Galagedara) DSD.
Again, Stage 4 of the project starts at the Theliyagonna GND of the Kurunegala DSD and it runs through the Mallawapitiya, lbbagamuwa, Mawathagama, Rideegama, Melsiripura, and Galewela DSDs, and ends at Mirisgoniya Junction of the Dambulla DSD (crossing A06), according to the Road Development Authority (RDA).
Meanwhile, The Sunday Morning learnt that negotiations for Section III of the CEP, which is to be constructed by Japan, had also failed to reach a consensus due to issues pertaining to the loan conditions.
As learnt by The Sunday Morning, the loan conditions related to jurisdiction and bribery were still being discussed by the two parties. Another condition being discussed was an incident where Sri Lanka wanted to remove the contractor from the project, which brought up concerns that the loan would be stopped by Japan and further concerns that the amount that was dispersed until that period would also have to be repaid.
The sources stressed that it doesn’t seem the project would see the light of day as the discussions were being stalled without any progress. “The Government should have the right to remove the contractor if they are not satisfied and with this condition,” he added.
The expected loan amount for the construction of CEP Section III is around $ 1 billion. Section III of the CEP will be built by Japanese Taisei Corporation with funds obtained through a loan from Japan’s Tokyo Mitsubishi Bank.
photo pradeep dambarage