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Expressways: Finance Ministry asks Highways Ministry to get donor concurrence
View(s):By Namini Wijedasa
The Finance Ministry has urged the Highways Ministry to get the concurrence of lending agencies that had funded road construction before devising plans to transfer the management and assets of Sri Lanka’s expressways from the Road Development Authority (RDA) to the new State-owned company named Sahasya Investments Ltd (SIL), the Sunday Times learns.
The letter indicates that this has still not been done. The three main lending agencies are the Asian Development Bank, Exim Bank of China and the Japan International Cooperation Agency. On March 25 this year, the Cabinet approved the separation of the expressway network, land and loans (local) from the RDA to SIL “in order to be able to manage them in a more commercial manner”. It was proposed to transfer day-to-day operations and management under a formalised management agreement by April 1, this year; and all relevant assets within six months.
Neither has happened, authoritative RDA sources said, adding that they were still reviewing a draft management agreement sent to the Authority by the Highways Ministry. A memorandum of understanding has already been signed between the two parties.
But not only must the RDA Act and the National Thoroughfares Act be amended to operationalise the Cabinet decision, the Land Acquisition Act—under which the RDA has acquired hundreds of thousands of hectares for expressways around the country—must also be changed.
“This doesn’t seem to have been a well-thought-out decision,” a senior official said, requesting anonymity. “The deadlines in the Cabinet paper are especially unrealistic. And the objectives of the decision remain unclear.”
The Finance Ministry on Monday wrote to the Highways Ministry Secretary requesting him to get donor concurrence for the proposed transfers. The letter reveals that the Highways Ministry has still not responded to an earlier communication in this regard.
The relevant department has pointed out that, as the borrower, Sri Lanka was obliged to get lending agency concurrence before moving towards implementing any of the steps outlined in the Cabinet decision of March 25.
It was therefore imperative that the Highways Ministry pursues “immediate and necessary actions” in keeping with the directives issued in the previous Finance Ministry letter. Failing to do so “will otherwise trigger negative legal implications as per the conditions of the concluded loan agreements”.
Highways Ministry Secretary Ranjith Rubasinghe confirmed to the Sunday Times that neither the management of expressways nor their assets had been transferred to SIL yet. The Ministry was now looking at how the proposed moves align with donor agreements, he said.
“We have to follow procedure,” he explained. “So we are reviewing those (lender) agreements and trying to understand the implications of those conditions on the process. This is the first time we are doing something like this.”
According to preliminary discussions, there is no decision to transfer RDA staff—those attached to expressways—to SIL; only the management of the network. And, initially, SIL will hope to run the expressways with RDA employees, Mr. Rubasinghe explained.
The second phase was assets transfer but nothing has yet been finalised. He assured that there would be full transparency in how the process was devised and carried out.
At present, the RDA operates, manages and maintains the expressways network while the Treasury holds the liabilities and receives the revenue (through the Authority).
Mr. Rubasinghe maintained that there were “several advantages” in the proposal for SIL to take over—including the expected improvement in the efficiency of operations. This could include electronic tolling and “better service”.
“The whole purpose is to make expressway operations economically and financially feasible,” he insisted.
SIL is owned by the Treasury and currently has a chief operating officer (drawn from the RDA) and a Finance Ministry official on its board. It was not immediately clear whether it would hold the liabilities of the RDA along with assets; who would pay for operation and maintenance of the expressways; and who would settle the loans.
There is broad opposition within the RDA to these moves on the basis that reforms can be done within the Authority, which is an independent statutory body; and that the RDA can enter into public-private partnerships to manage the expressways itself—“instead of carving this up and playing with taxpayer funds”.
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