President Anura Kumara Dissanayake has informed the Cabinet that for future large-scale infrastructure projects such as expressways, prospective local contractors must secure foreign funding or loans rather than relying on local state banks, the Sunday Times has learned.
The President emphasized that allowing local companies to borrow from state-owned banks could hinder the financing of other essential development efforts, such as rural road projects.
This directive comes as the Government has decided to continue the partially completed Kadawatha–Mirigama stretch of the Central Expressway project with the Chinese state-owned enterprise, Metallurgical Corporation of China Limited (MCC).
While the Road Development Authority (RDA) had previously recommended awarding the stalled project to local bidders, the Government ultimately opted to move forward with MCC due to several practical considerations.
Deputy Highways Minister Prasanna Gunasena told the Sunday Times that the Government chose to proceed with MCC and secure financing from China EXIM Bank, citing logistical and financial challenges in pursuing alternative options.
“One of the main conditions to access the EXIM Bank loan is to continue the project with MCC, which was already contracted for the job,” the Deputy Minister said. “However, we successfully renegotiated the loan terms, securing a lower interest rate and changing the repayment currency from US dollars to Chinese yuan.”
He also noted additional benefits of working with MCC, including the reuse of existing machinery and the continuation of the original design, avoiding extra costs associated with redesign and equipment procurement.
Construction on the 37-kilometer Kadawatha–Mirigama section has been stalled since April 2022, when China EXIM Bank suspended loan disbursements following Sri Lanka’s sovereign debt default. The delay has led to parts of the infrastructure becoming corroded and structurally compromised.
Deputy Minister Gunasena further revealed that delay charges are averaging Rs. 20 million per day.
The original loan agreement for this section was signed in March 2019 between the China EXIM Bank and the Government of Sri Lanka, amounting to US$ 989 million—covering 85% of the total contract cost.
The Government now expects to resume construction work on the project next month.
