Despite an official freeze on costly mega projects, Sri Lankan Highway Ministry officials are pressurising the country’s Road Development Authority (RDA) to finalise a USD 550 million elevated highway, to a Chinese company local media reported.

The officials, who are now holding closed-door discussions with the China Harbour Engineering Corporation, are promoting the New Kelani Bridge (NKB) as a “means to attract dollars into the country” despite the fact that the terms of the financing agreement are “deeply unfavourable” to the RDA.
Due to the debt default, Sri Lanka cannot borrow from China Exim Bank or other sources immediately, so CHEC will secure a loan for the project, which will be repaid by the RDA, The Sunday Times, Sri Lankan-based newspaper, reported.

The full arrangement is described as an “unusual type of BOT [build, operate and transfer] deal”, that will require the authority to pay significantly more for the 17km four-lane expressway which will run the entire distance on pillars. The mandatory environmental impact assessment is also not complete.
Efforts to try and award the final contract contravene at least one court order to suspend the process pending the final determination of a judicial challenge against the Rajagiriya to Athurugiriya section on environmental grounds. More than 3km of this stretch will cross the Averihena Tank and surrounding paddy fields which are part of the Thalangama wetland.

Earlier, in 2007, the Wetland and its surrounding area were designated as an Environmental Protection Area (EPA) under the National Environmental Act (NEA), owing to its “ecological, hydrological and historical importance”.

However, in July of last year, the Highways Ministry persuaded Environment Minister Mahinda Amaraweera to amend the gazette to include the construction, operation, and maintenance of the four-lane elevated highway from NKB to Athuruguriya (as well as all construction related to the project) as “permitted uses” under the law, according to The Sunday times.

The project, including this amendment, is being challenged in two different courts. The Centre for Environmental Justice and two Thalangama residents have filed a writ petition with the Supreme Court. The case will be taken up again on September 23 this year.

In February of this year, the Appeal Court issued an interim order preventing the construction of the expressway until it concludes hearing a petition filed by another resident. It was observed that the Environmental Impact Assessment (EIA) pertaining to the project had not been obtained. The case will be taken up on December 5.

Despite this, the Highways Ministry intends to present a memorandum to the Cabinet seeking approval to begin procurement for the elevated highway. According to RDA sources, the BOT deviates blatantly from the norm.

BOTs are generally adopted when a Government has no finances, when long-term concessionary funding from agencies such as the ADB, JICA and China Exim Bank is unavailable or when the Government has exceeded borrowing limits, reported The Sunday times.

In a typical BOT project, the developer builds and implements the project, usually recouping his investment within 25-30 years. The project is then handed over to the Government.

If the developer’s revenue falls below target during the prescribed period, the deficit between income and expenditure is met as gap funding at the start of the project; or the Government pays the difference as an annual disbursement.

“In both cases, Government spending is minimal,” authoritative RDA sources said. “But the Highways Ministry’s proposed agreement for this highway is totally different. It is a distorted BOT scheme that is unfavourable to the Government.” (ANI)