LNP – Govt. considers pact termination with over US $ 40 million compensation for fresh deal

The government mulls termination of the current project for the construction of the Kadawatha – Mirigama stretch of the Central Expressway with a payment of over US $ 40 million as compensation to the project company, and renegotiate a new deal under fresh terms for execution, an official said.

The loan agreement for this stretch of the Central Expressway has been signed between China EXIM Bank and Sri Lanka: US$ 989 million to cover 85 per cent of the contract price. Besides, the estimated construction cost of phase 1 of the Central Expressway (Kadawatha – Mirigama stretch) has more than doubled since 2015 when the project agreement was originally signed. The first agreement for the project was signed in 2015 and the second in 2016, but successive governments failed to realize it during the last ten years.

Asked about the current status of the project, Deputy Transport Minister and Highways Dr. Prasanna Gunasena told Daily Mirror that the authorities concerned are in the process of calculating the due amount to be paid to the project company as compensation in case the project is terminated for a fresh deal.

“Termination of the current project and renegotiation of a fresh project is a better option for the current government. In such an event, we have to pay compensation to the project company,” he said.

Asked about the amount involved in this case, he said it would be more than US $ 40 million.

“We are yet to take a final decision. It will be done in two weeks’ time. We will construct the Mirigama – Kadawatha stretch of the expressway for sure. It may be as a new project, though,” he said.

Earlier, the government said Metallurgical Corporation of China (Ltd) has been awarded the contract for the project.

The phase 2 of the expressway – Mirigama – Kurunegala stretch – has already been completed. It is now in use. Construction work of the next phase which links Kurunegala with Kandy is already underway.