Taking more loans while having unpaid bills in billions – What is the government doing?

Taking more loans while having unpaid bills in billions – What is the government doing?

Written by Lahiru Fernando

24 Sep, 2017 | 10:17 pm

Four Billion Rupees. That is the amount released by the Road Development Authority from expressway earnings.

Who did the RDA release this money to? – The Treasury.

Why? – to settle a portion of unpaid bills amounting up to Rs. 6.6 Billion.

The above was reported by the Sunday Times newspaper today (September 24). The newspaper report says that it is not clear how the backlog of unpaid bills reached Rs. 6.6 Billion.

According to the article, there are Three Billion Rupees in payments due for widening and improving National Highways.

Rs. 600 million worth of work was carried out in 2016.

Another Rs. 1.6 Billion is due for road maintenance and a further 2 billion for rehabilitation and improvement of National Highways funded by local banks.

As per the ‘Official Documents’, reports the newspaper, the annual budget allocations for the road sector are high.

However, the amount of money actually advanced, fall below the promised amounts.

Unpaid bills and more loans

So there are plenty and more bills which are yet to be settles. Bills which are, well, quite…. humongous.

But the government is taking steps to get a commercial loan to fund the central expressway.

Take a moment. Let that sink in.

Reports say that the Asian Development Bank and JAICA rejected funding the Central Expressway project due to two reasons.

  • The lack of an Environmental Impact Assessment
  • The lack of a proper plan to obtain lands or resettle those affected

Massive commercial loans are obtained at high interest rates and many conditions attached to them for the First, Second and the third phases of the Central Expressway.

Phase 1: Exim Bank of China

Phase 2: Two local banks

Phase 3: Tokyo Mitsubishi bank

Lets take a look at what we are getting from the Tokyo Mitsubishi bank

  • The Loan: $1 Billion USD (approx. Rs. 153 billion) on high interest rates
  • Insurance fee: 10.07%
  • Arrangement fee: 1.1%
  • Commission fee: 0.25%

In the end, won’t the people of this country have to pay a large sum of money due to the actions of this government?

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