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Govt. offers soft loans, highway contracts to local constructors, instead of settling Rs. 40bn bill
The President’s Office has directed the Central Bank of Sri Lanka (CBSL) to issue instructions to commercial banks to grant loans at four percent interest to construction companies in lieu of settling nearly Rs 40bn worth of unpaid bills owed to them by the Government.
The President’s Office also said the Ruwanpura Expressway from Kahatuduwa to Pelmadulla would be awarded to local contractors after they complained bitterly that they were routinely edged out of large infrastructure projects in favour of Chinese companies.
But a Cabinet paper giving effect to the President’s undertaking is held up at the Highways Ministry which has been negotiating with M/s China National Technical Import and Export Corporation (CNTIC) to build Section 1 of the Ruwapura Expressway.
The meeting with construction industry representatives took place on Monday. Also present were Secretaries to the Ministries of Highways and Urban Development, the CBSL Governor and chairpersons of relevant institutions.
The companies pointed out that, after work draws to a close on the second section of the Central Expressway (CEP II), their heavy machinery and other investments will lie idle. They requested, therefore, that at least one strategic, mega construction project be given to them and were promised the Ruwapura Expressway.
Local contractors later expressed gratitude in a letter to President Gotabaya Rajapaksa, pointing out that “most of our companies have performed as good as foreign construction companies or some are even better…”
The Highways Ministry has shown preference for single bids from Chinese companies for several projects, including the elevated expressway from Athuruguriya to New Kelani Bridge. Officials led by Highways Secretary R.W.R. Pemasiri have been dealing with China Harbour Engineering Company Ltd (CHECH) for that project, despite there being a least five other proposals on the cards.
It was not immediately clear whether instructions from the President’s Office regarding the Ruwanpura Expressway will be followed. The project is currently divided into three sections. It was earlier proposed to start construction of the 52.5km from Kahathuduwa to Ratnapura via Ingiriya. The remainder was to be based on funding availability.
Meanwhile, construction industry sources said they were “not happy” about the decision to meet their unpaid bills with further loans. “It’s like from the frying pan into the fire,” one senior manager said. “However, that’s what has been offered.”
The Finance Ministry’s 2019 Annual Report states that the Government’s unpaid bills now amount to 2.2 percent of Sri Lanka’s Gross Domestic Product (GDP) and include claims worth Rs 1.8bn incurred in the conduct of last year’s presidential election.