The Road Development Authority (RDA) is struggling to secure investors for the Central Expressway Project (CEP) despite a reported directive from the Presidential Secretariat to expedite the project, The Sunday Morning learns.
Sources close to the issue told The Sunday Morning that the challenge was in finding investors due to drastically-weakened investor confidence in bankrupt Sri Lanka and its history of policy reversals on major infrastructure projects.
They added that it was unlikely that the RDA could secure a suitable investor before the anticipated $ 2.9 billion International Monetary Fund (IMF) programme could be secured and the country’s economic climate could be stabilised.
Nevertheless, a senior Government official told The Sunday Morning that a Japanese investor had indicated interest in CEP III pending confirmation of the IMF bailout and investment environment of the country. “They are interested in seeing the viability of CEP III after the IMF comes in,” the source explained.
The CEP is among the key projects that have been identified under the recently-proposed Senkadagala Development Project aimed at transforming the historic city of Kandy into a well-planned, organised, and developed city. The project proposed by President Ranil Wickremesinghe received Cabinet approval recently.
According to the Presidential Secretariat, under the said project, the Government intends to take measures to accelerate the CEP that will connect Kandy to Katugastota.
Nevertheless, when contacted by The Sunday Morning, RDA Director General L.V.S. Weerakoon said that as of last week, there had been no Expression of Interest (EoI) for investment in the CEP sections III and IV.
According to him, the construction work of the CEP I, funded by China’s Exim Bank, is currently moving slowly and was expected to become activated soon after the country received the IMF bailout.
When asked if the situation with investors would change after the bailout programme kicked in, he said: “We hope things will be different when Sri Lanka receives IMF assistance.”
He stressed that the construction cost of the project had now been estimated at Rs. 365 billion, whereas earlier it had been around Rs. 187 billion.
Construction of the Central Expressway was planned to be carried out in four stages; section I – a 37 km section from Kadawatha to Mirigama, section II – a 40 km section between Mirigama and Kurunegala, section III – a 33 km stretch from Pothuhera to Galagedara, and section IV – a 60 km section from Kurunegala to Dambulla.
The construction of section I of the project is currently being carried out by a Chinese company with funds from China’s Exim Bank, but the construction work has been hit by the ongoing economic crisis and the temporary suspension of funds from the Exim Bank.
Section II was constructed by local contractors and is now open to the public.
The 34 km-long stage III from Pothuhera to Galagedara was to be constructed by a Japanese contractor at an estimated cost of around Rs. 135 billion with a loan obtained from Tokyo Mitsubishi Bank (TMB) Japan.
However, due to the delay in the two parties coming to an agreement, in 2020 the Government removed the Japanese contractors from section III of the CEP. For section IV, there have been discussions that the construction will be awarded to a UK-based contractor, but nothing has been officially finalised yet.