Govt. seeks over $105m from China to fund water projects

Thursday, 28 April 2016 00:00 - - {{hitsCtrl.values.hits}}

The China Development Bank will fund two $105 million water supply projects in Katana and Thambuttegama that will be built by China National Aero Technology International Engineering Corporation (CATIC).

The Cabinet paper to secure funding , presented by City Planning and Water Supply Minister Rauf Hakeem, was passed by the ministers. CATIC was the Chinese State-run company, which the United National Party (UNP) lobbied heavily against in 2011, over the controversial Galle Face hotel deal.

Under the new projects, which were given approval in July 2015, the China Development Bank will fund 85% of the total project cost. For the Katana water supply project the cost will be $35.5 million along with Rs. 4 billion from Chinese funding while another Rs. 2 billion will be provided by the Sri Lankan Government as their 15%.

The Government share will be mostly used to cover taxes including VAT, land acquisition and project management costs.

Under the latest Cabinet paper approval was given to negotiate funding from the China Development Bank and arrange financing from a local bank if 100% of the total value of the contract is not available.

The Thambuttegama water supply project is larger with the China Development Bank expected to provide $70.6 million along with Rs.2 billion. The Government share of Rs.4.1 billion will again be used for taxes and other rudimentary purposes.

Both the water projects aim to reduce chronic kidney disease in Sri Lanka and come with Treasury guarantees as they are under the Cabinet’s decision to allow for foreign financing to promote water supply projects.