Elevated highway: Govt. accepts unsolicited proposal from Chinese company

The Government has accepted an unsolicited proposal from China Harbour Engineering Company (Ltd) for the elevated expressway from Athurugiriya to New Kelani Bridge via Rajagiriya — a project for which bid documents had already been finalised to call an open tender.

The CHEC bid was directed via the Board of Investment (BOI) and discussions are underway, the Highways Ministry Secretary has told media. However, a three-volume Request for Proposals comprising at least 300 pages each was earlier drawn up with the aim of attracting prospective bidders on a level playing field.

It was not immediately clear how a single bid was entertained when Cabinet approval was granted for talks to be conducted with “prospective contractors” who are willing to provide an “acceptable proposal for finance, construction and transfer the project at the end of a mutually agreed period to the Government without burdening the Government budget”. A question sent via text message to Highway Ministry Secretary R.W.R. Pemasiri went unanswered.

It is also not clear how any such project will not burden the Government budget because the money will eventually have to be paid off on terms agreed with the contractor.

The Highways Ministry and the Road Development Authority (RDA) in recent weeks have been steaming ahead with road construction initiatives but keeping many of them under wraps. This includes the elevated highway and a bridge that is to span from School Avenue to Angampitiya Road in Kotte.

Projects are now mushrooming. The latest Cabinet memorandum to be approved even mentions two flyovers — one near Sri Uttarananda Mawatha in Colombo 3 and another near Komapannaveediya station over the railway lines. Last week, Cabinet Spokesman Ramesh Pathirana said the Highways Ministry would borrow Rs 15bn from China Development Bank (CDB) to develop 105km of roads in the Matara and Hambantota districts.

The Cabinet has agreed, too, that negotiations can proceed with a consultancy company called M/s Roughton International (Pvt) Ltd for construction of a section of the Central Expressway with financing purportedly from United Kingdom Export Finance (UKEF).

For Section III of the Central Expressway, the Highway Ministry wants a financier who can provide his “own financing to start the project with US$ 170 million until total financing is ensured”. This is a new mechanism to be included in Cabinet papers, surfacing under the current administration.

“The financier would require arranging the total loan amount without burdening the Government of Sri Lanka for next 5 years,” the relevant Cabinet memorandum states.

Meanwhile, the Highways Ministry is negotiating with M/s China National Technical Import and Export Corporation (CNTIC) for the construction of Section I of the Ruwanpura Expressway from Kahatuduwa to Ingiriya. A Cabinet Appointed Negotiating Committee has requested the contractor to arrange its own financing, again “to start the project with US$ 110 million until total financing is ensured”.

The latest Cabinet paper does not mention CEP I, for which Cabinet earlier approved borrowing Rs 31.7bn as counterpart funds. The Chinese party that won the contract — M/s Metallurgical Corporation of China (MCC) — has since agreed to foot 7.5 percent of this bill. But that still leaves the Government with substantial borrowings at a time when the global economy is racked by uncertainty.