China Harbour Engineering Corporation gets contract for linking Athurugiriya interchange and New Kelani Bridge

The Government is to build the elevated expressway linking the Athurugiriya interchange and the New Kelani Bridge as the first foreign direct investment project in expressway construction in the country, Cabinet was told this week.

M/S China Harbour Engineering Corporation (CHEC), which already has a large project portfolio in Sri Lanka, won the contract with Cabinet approval being granted.

A senior Highways Ministry official said this arrangement, also called the ‘availability model’, was the best option, instead of applying for Asian Development Bank or World Bank funding as these would take longer to negotiate.

The four-lane elevated highway will be on the basis of design, build, finance, operate and transfer. The investment is USD 800mn (Rs 158bn at prevailing rates) and covers 17 km from Athurugiriya to Orugodawatta, the official said. It is a total of 32 km when interchange roads are considered. The inter changes will beat Aturugiriya, Koswatte, Rajagiriya and Orugodawatta.

Bids comprising financial and technical proposals were invited in May last year. While six parties collected the documents, two submitted bids, but one was rejected as there was no bid security, authoritative sources said. This left CHEC the sole responsive bidder.

When finalising technical and financial matters, the RDA retained M/S PricewaterhouseCoopers ( India) as transaction adviser. It was agreed with CHEC that there will be an 18-year concession period - three years construction and 15 years operation and maintenance - instead of a 33- year concession period. This is more beneficial to the Government, the Cabinet paper claims.

A semi-annual availability payment model was agreed upon. These payments are a means of compensating a private concessionaire for its responsibility to design, construct, operate, and maintain a tolled or non- tolled roadway for a set period of time. They are made by a public project sponsor - in this case, the RDA - based on particular project milestones or facility performance standards.

“The average income from the toll fee which is collected by RDA will be about USD 17mn (Rs 3.3bn) semi-annually,” the Cabinet paper states. “Therefore, the financial burden for the government will be minimised.”

The project is expected to be completed by end November 2023.

Last year the government terminated a Japan International Cooperation Agency ( JICA)funded light railway transit (LRT) project due to come up in the same area.