A new institution to fund infrastructure projects

The Unity Government has decided to set up a State-owned Special Infrastructure Company (SIFCO) shortly to provide funding to vital infrastructure projects and to own and operate all expressways.

SIFCO will be involved in raising capital or borrowings for investments in expressways, manage the assets, undertake development and own all future expressways.

The Cabinet has approved the proposal presented by Finance Minister Ravi Karunanayaka. to establish the SIFCO.

It is proposed that the completed expressways will be transferred to SIFCO with an asset base of some Rs.243 billion.

SIFCO will also undertake to provide collateral for loan agreements.

The new company will obtain a credit rating from an international rating agency and utilize risk management techniques such as credit insurance or underwriting of SIFCO debts by a multilateral agency.

“Giving priority to investing in major infrastructure projects to accelerate the development of the country by using efficient and cost effective mechanisms and manage funding in a structured and accountable manner is a vital government policy,” the minister said in his memo.

The creation of SIFCO will allow the financiers (local and international) to lend directly to SIFCO to be invested in expressway Projects.

The S1FCO will be created as a public limited company incorporated under the Companies Act of Sri Lanka 100% owned by the Government.

“SIFCO with the majority shares vested in the RDA will act as a structure necessary for long term foreign investments in the country’s infrastructure projects, to incorporate a separate Special Purpose Vehicle which will allow foreign capital market investments to accelerate infrastructure projects by using Structures such as Takeover, Operate and Transfer (TOT),” the minister said.