Central Expressway: Response To Rusiripala’s Questions
Lakshman Kiriella – Minister of Highways
While I thank Mr. Rusiripala Tennakoon for raising 17 questions with regard to the tender procedure on Central Expressway (තවත් උණුසුම් සතියක් – මධ්යම අධිවේගී මාර්ගය හා තවත් කතා Colombo Telegraph – September 28, 2017), I must correct him on factual issues.
Question 1 – Is it true that the tenders have to be called only from the Japanese Contractors instead of calling public tenders, as the Japanese Government gives assistance?
Answer – When we obtain loans from the banks operated in foreign countries usually there is a condition that limited quotations from the contractors in those respective countries should be called. This condition is there in the case of the loan for the Section 3 of Central Expressway which was arranged with the intervention of Japanese Government from a private bank. At the stage of loan negotiations as well there has been an understanding between the two parties that the tender should be limited to Japanese contractors.
Question 2 – If it is so, what is the assistance received from the Japanese Government for this Project?
Answer – The loan was arranged with the intervention of the Japanese Government. The Embassy of Japan in Colombo played a key role in arranging this loan facility.
Question 3 – Is it not a loan obtained from Japanese Bank on Commercial Basis?
Answer – This cannot be considered as a full commercial loan as there are certain concessionary terms such as 6 years of grace period and 15 years of repayment period. Also annual aggregated cost of financing ranges from 2.02 to 2.22 (including Libor) percent according to the behavior of financial market. This annual cost of financing includes interest, annualized insurance, annualized commitment fee, arrangement fee and annualized agency fee.
Question 4 – If it is so, are the interest charged for the said loan and the re-payment schedule, so concessionary that one that cannot be obtained from any other commercial bank?
Answer – Currently, the rate of interest for this Yen loan facility is 0.95 percent per annum, whereas, the current annual rate of interest for commercial loans in the international market lies between 3 to 6 percent per annum for any dollar loan. On top of this, commercial banks would request the insurance, commitment fee, agency fee and other charges as well.
Question 5 – Before taking the decision was there a further fact finding report done?
Answer – Any external loan facility taken by Sri Lanka government is being negotiated by the Department of External Resources. With regard to this facility also there were several rounds of negotiations with the respective bank officials by the Department of External Resources with the participation of officials from the Ministry of Higher Education & Highways.
