Japan’s assistance that is making way for Central Expressway is a commercial loan?

Japan’s assistance that is making way for Central Expressway is a commercial loan?

Written by Staff Writer

21 Oct, 2017 | 7:36 pm

During an event held in Kandy on Friday, Prime Minister Ranil Wickremesinghe and Minister of Higher Education and Highways, Lakshman Kiriella, spoke on the construction of the Central Expressway.

The following statements were made on the subject.

PM Ranil Wickremesinghe: “..we tried to commence this in 2003, that is what we said, that we would construct the Central Expressway when the good governance government comes into power. It will be done, have no doubts, it will be done even though they call me a thief for getting assistance from Japan..”

Minister Lakshman Kiriella: “..it was the Prime Minister who secured the funding for this project. The Colombo – Kandy Expressway is the Prime Minister’s dream, as well as my dream. The first phase has already begun from Kadawatha to Mirigama. The second phase – from Mirigama to Kurunegala will be built by local contractors. Around 5 to 10% of the work has been completed. The third phase runs from Galagedara to Pothuhera and will be done by a Japanese company. The Prime Minister travelled to Japan and personally met with the Japanese Prime Minister to obtain financial assistance for this project..”

Assistance or a commercial loan?

The statements made by the subject minister and the Prime Minister in Kandy yesterday, could mislead the public to believe that the third phase of the Central Expressway is being constructed with assistance from Japan.

Funding for the third phase of the Central Expressway is a COMMERCIAL LOAN – NOT ASSISTANCE.

This is how funding was secured for the Central Expressway project:

First phase: Exim Bank of China
Second phase: Two local banks
Third phase: Commercial loan with a high interest rate and strict conditions from the Tokyo Mitsubishi bank

The USD 1 billion commercial loan from the Tokyo Mitsubishi bank comes with a high interest rate and a host of other charges including 10.07% insurance premium, 1.1% arrangement fee and an additional commission of 0.25%.

The tender for the construction of the third phase has been awarded to Japan based Taisei Corporation.

Incidentally, the Fair Trade Commission of Japan had earlier filed criminal charges against Taisei for bid-rigging while the company also faced allegations for a sinkhole that was created in Tokyo during a construction carried out by them.

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