Thursday, 6 March 2014 01:08
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President prepares to open two highways costing Rs. 42.7 b
Northern, southern II and III expressways all funded by China
Revenue from existing highways inadequate to meet loans, tolls for new Gazetted on Friday
By Uditha Jayasinghe
Days ahead of the Outer Circular highway opening and rolling out of new projects, a top official acknowledged revenue from existing expressways are inadequate to cover their costs but insisted fares would not be increased exorbitantly.
The tolls for the two new highways will be released in a gazette notification on Friday.
After the opening of the Colombo Outer Circular Highway on 8 March and the extension of the Southern expressway on 15 March by President Mahinda Rajapaksa, the Government will push ahead with the last phase of the Southern expressway, the second stage of the Outer Circular Highway and extend it up to Jaffna forming the northern expressway.
However, revenue from the previously opened southern and Katunayake expressways are not adequate to repay the hefty loans obtained for the projects, said Highways Ministry Secretary Ranjith Premasiri in response to questions. “The annual revenue from the Southern Expressway is about Rs.1 billion while the Katunayake one yields about Rs.1.3 billion. These amounts alone will not repay the loans and we were aware of this from the feasibility stage. We are also obtaining extra loans for maintenance purposes and the shortfall will be covered by the Treasury through alternative funds available to the Government,” he said.
The Southern highway cost US$ 741 million and was jointly funded by Japanese cooperation agency JICA, Asian Development Bank and China EXIM Bank with varying terms of repayment and interest rates. The airport expressway cost US$350 million.
The Outer Circular Highway, which includes several national and provincial roads as well cost Rs.24 billion and was primarily funded by JICA. The extension of the Southern highway up to Matara cost Rs.18.7 billion and was built by State-owned China National Technical Import and Export Corporation (CNTIC) with funds from the EXIM bank of China.
China is also deepening involvement in Sri Lanka’s massive infrastructure development with State-run China Merchant’s Group earmarked to build a US$ 1 billion dollar expressway that will kick off later this year.
The northern expressway is considered to be the largest highway project embarked upon by the Sri Lankan government to date, aimed at linking the former war torn north through the tourist hot spot of Kandy to capital Colombo. When completed the highway is expected to be about 300km in length.
Construction of the first phase of about 48km is expected to begin in August and will be done under the Build Own Transfer (BOT) system. Highways Ministry Secretary Ranjith Premasiri told the Daily FT.
“The feasibility study has been completed and a Memorandum of Understanding (MoU) has been signed with the company. We are discussing details of tax holidays and land allocation presently,” he added.
It was earlier reported the construction of the first 100 km of the Northern Expressway was awarded to two China Merchant group companies, China Merchant Holdings International (CMHI) and China Merchant Huajin.
The venture was earlier reported to be funded by China Development Bank. The first phase stretch will have five interchanges, 50 overpasses and 30 underpasses.
CMHI are also in charge of a US$ 500 million expansion of the Colombo Harbour, which is also under the BOT system.
The first phase is estimated to cost US$ 1 billion and will take a minimum of 18 months to complete, he added.
On 15 March President Mahinda Rajapaksa will also ceremoniously open a 30.81 km extension to the Southern expressway also funded by China EXIM Bank. The cost of the highway extension is Rs. 18.7 billion (about US$ 139 million).
The third phase of the Southern expressway will be handed over to China National Aero-Technology Import and Export Corporation (CATIC) for construction.
Since Sri Lanka ended a 30-year war in 2009 China has emerged at the island’s largest loan provider with US$ 1.2 billion in loans in 2009 and US$ 821 million in 2010.
In 2011 the amount fell to US$ 784.7 million and during the first three quarters of 2013 China’s bilateral loans grew to US4 517. Last year alone China was responsible for more than a quarter of all foreign funding coming into Sri Lanka, according to the Finance Ministry.
China remains involved in almost all the large scale projects taking place. Some of the biggest projects include a US$ 1.3 billion coal power plant on the north western shore as well as a host of other investments in the south of the country that are estimated to exceed US$ 4 billion, including a US$ 1.2 billion harbour.
