Sri Lanka’s Central Expressway construction project has met with an unavoidable obstacle following the decision of China’s state-owned Exim Bank to suspend the US$ 51 million loan for the first phase of the project.

The release of the funds from the Exim Bank of China has been halted at present owing to the current economic crisis in the country and the Sri Lanka Government’s decision to suspend repayment of foreign loans, Treasury sources revealed.

.asa result the construction company has decided to terminate the service contract of workers anfas result around 500 chinese workers have started leaving the country affecting the jobs of 2000 local construction workers in the area.

The construction work began in September 2021 and it was targeted to complete the work by the year 2024. Ministry sources disclosed.

32 percent of the Central expressway phase 1 project construction has been completed by using government funds amounting Rs33 billion.

The Central Expressway Project has been divided into four sections: Section 1 from Kadawatha to Mirigama is approximately 37 km, Section 2 from Mirigama to Kurunegala is approximately 39.7 km while the stretch from Mirigama to Ambepussa is approximately 9.1 km, Section 3 from Pothuhera to Galagedara is approximately 32.5 km, and Section 4 from Kurunegala to Dambulla is approximately 60.3 km.

The Ministry revealed that the tender process related to the third phase of the Central Expressway had lao been cancelled due to the dire economic conditions of the country and that no decision had yet been made with regard to if and when a fresh tender would be called in relation to the project.

It was further revealed that this cancellation of the tender process was made pursuant to the directive issued by the Finance Ministry to halt all capital expenditure.

This revelation was confirmed by Access Group of Companies Founder Chairman Sumal Perera, whose company Access Engineering was part of the local consortium named LDIC, which was linked to the tender process.

In July 2021, the Highways Ministry called for tenders from local and international companies interested in constructing the third phase of the Central Expressway. It was later revealed that proposals were submitted by the Metallurgical Corporation of China (MCC) and a local consortium named LDIC comprising Access Engineering, International Construction Consortium (Pvt) Ltd., K.D.A. Weerasinghe & Co (Pvt) Ltd., and NEM Construction (Pvt) Ltd.

However, controversy arose when it was revealed that the proposal submitted by MCC had not been considered by the Government on technical grounds and that only the proposal submitted by LDIC had been opened and considered, despite the fact that the bidding price of LDIC was higher by $ 822 million (56%) at $ 1.87 billion compared to MCC’s bid of $ 1.05 billion.

Therefore, it WAS evident that MCCI’s Bid has been disqualified for the total violation of the bidding process, including not complying with some fundamental requirements of the government procurement guidelines, thus showing scant disregard for the tender process.

As such, the bid price is not known to the public. In their futile attempt to mislead the evaluation process in order to sabotage the project, MCCI now seems to be quoting any arbitrary price in public.

Sinopec, the biggest petrochemical company in China, is likely to enter the Sri Lankan market for fuel importing, distribution and selling petroleum products, informed sources said.

Cabinet of Ministers in June approved a proposal to allow more companies from oil-producing nations to import oil and start retail operations in Sri Lanka.

The proposal, prompted by severe foreign exchange shortage, was tabled by Power and Energy Minister Kanchana Wijesekera.

At present, 90 percent of Sri Lanka’s fuel supply is through the State-owned Ceylon Petroleum Corporation, and the remaining 10 percent by Lanka IOC.

Sinopec is already present at the Port of Hambantota where it operates an oil depot. The Hambantota tank farm was issued the FSS certification (Fitness for Service) by Lloyd’s Register in April 2020.

China Petroleum and Chemical Corp, known as Sinopec Corp, said on Monday it has set up a fuel oil company in Sri Lanka as it looks to supply fuel to ships along a major maritime route.

The new unit, called Fuel Oil Sri Lanka Co Ltd, has been registered in Hambantota on the southern tip of the country, according to a report on the website of Sinopec Group, parent of Sinopec Corp.

Fuel oil is a refined product mostly used as bunker fuel for ships and is also burned in power stations.

The move marks the latest investment in Sri Lanka by China, which sees the South Asian island nation as a pivotal part of its Belt and Road Initiative infrastructure plan.

Sinopec stressed the strategic location of Hambantota port on the Indian Ocean along a key shipping route between the Suez Canal and the Malacca Strait, which is transited by two-thirds of global oil shipments. The market to supply fuel to ships had “huge” potential, it said.

In March, India’s Accord Group and Oman’s Ministry of Oil and Gas signed a $3.85 billion deal to build a 200,000 barrel-per-day oil refinery near Hambantota port, in the biggest single pledge of foreign direct investment ever made in Sri Lanka.

China Merchants Port Holdings, China Harbour Engineering Corp and other Chinese companies are investors in the port and industrial zone.

Sinopec has set a company-wide target of 10 million tonnes of production capacity by 2020 to supply low-sulphur bunker fuels that meet the cleaner emission standards set by the International Maritime Organization (IMO).

Saudi Arabian Oil Company (Aramco) has signed a memorandum of understanding (MoU) with China Petroleum and Chemical Corporation (Sinopec) covering multiple areas of potential collaboration between both the parties in Saudi Arabia.

This association will strengthen relationships with Sinopec and support strategic investments in Saudi Arabia.

The MoU has outlined pathways for strategic cooperation between Aramco and Sinopec and support the long-term relationship between the two companies and their existing joint ventures in China and in Saudi Arabia.

The Bandaranaike International Airport (BIA) expansion project funded by the Japanese International Corporation Agency (JICA) has been suspended temporarily as the Government is not in a position to repay the loan. The project drew controversy recently over allegations that a minister was involved in a bribe, a charge hotly denied by Japanese authorities.

JICA has decided to halt the funding of US$570 million for the Terminal-2 construction of the BIA Development Project (BIADP) Stage 2 compelling the contractor Japanese Taisei Corporation Sri Lanka Ltd to suspend the work till the finalisation of Sri Lanka’s debt restructuring process, Aviation Ministry sources confirmed.

In April, Sri Lanka suspended all foreign loan repayments and working with international parties on a debt restructuring programme.

In addition the Taisei Corporation has faced difficulties in the procurement of necessary materials for the construction work and high costs owing to the current economic situation in the country, a senior official of the ministry said.

Due to the prevailing situation in Sri Lanka, unavailability of fuel and other materials, the project has been suspended temporarily; therefore the management has decided to terminate the employment agreement of workers on the project, Taisei Corporation confirmed.

However the Aviation Ministry is to persuade JICA to continue funding considering the importance of the project for Sri Lanka as an urgent matter on the directions of Minister Nimal Siripala de Silva, who was reinstated in his post after a Presidential committee exonerated him of allegations of any bribe-taking

Denying the bribe allegations, General Manager of Taisei Corporation Sri Lanka Maskato Sato said that he was shocked to hear such unfounded allegations.

According to the JICA, the construction of the new passenger terminal building is expected to be completed in 2024.

The terminal building would be developed based on the concept of an Eco-Airport, with Japanese advanced technology and know-how.

After the completion of the terminal, BIA is expected to handle 15 million passengers per annum. A new apron and taxiways were unveiled under the BIA Expansion project recently.

The JICA’s total financing for the expansion has been provided under the Special Terms for Economic Partnership.

The loan facility has been granted on concessionary terms, with 0.1 per cent p.a. interest and a 40-year repayment period to promote technology transfer, build quality infrastructure and economic cooperation between Sri Lanka and Japan, JICA sources said.