China Eximbank provides $138.21 million in debt financing for Section IV (Pinnaduwa-Godagama) of the Southern Transport Development Project (STDP)

On February 17, 2011, China Eximbank and the Government of Sri Lanka signed two different buyer’s credit loan (BCL) agreements (No.BLA201011 and No.BLA201012) for Section IV (Pinnaduwa-Godagama) of the Southern Transport Development Project (STDP). No.BLA201011 supported “Package 1” [Highway Section from Pinnaduwa to Kodagoda (30.8 km to 45 km)], while No.BLA201012 supported Package 2 [Highway Section from Kodagoda to Godagama (45 km to 61.05 km) and balance work in Galle Port Access Road]. The face values of these two BCLs are unknown. However, the combined value of these two BCL is $138.21 million. We therefore record these two BCLs in a single project record (Project ID#45520). Both of these loans carried the same terms: an interest rate of 6 month LIBOR + a 2.40% margin, maturity of 15 years, 4 year grace period, 0.7% commitment fee, 0.3% management fee, and 6% exposure fee. The average 6-month LIBOR rate in February 2011 was 0.464%, so the total interest rate is coded as 0.464% + 2.40%, or 2.864%. The Southern Transport Development Project (STDP) is the largest greenfield road project ever implemented in Sri Lanka. The purpose of the STDP was to assist the development of the economy of Sri Lanka’s Southern Province by encouraging growth in industries, tourism, fisheries and agriculture by connecting the access roads to the country’s first access controlled highway. The STDP was financed by the Government of Sri Lanka and five development partners (Asian Development Bank, Japan Bank for International Corporation, Nordic Development Fund, Swedish International Development Association, and China Eximbank). The project involved the construction of the Southern Expressway, which is an access-controlled expressway of about 126 kilometers (km) from Kottawa to Godagama; the Galle Port Access Road, which is a 5.5 km long access road from the Southern Expressway to Galle; and a road safety component. The Southern Expressway was divided into four sections for financing purposes. Section I is from Kottawa to Dodangoda. Section II is from Dodangoda to Kurundugahahethekma. Section III is from Kurundugahahethekma to Pinnaduwa. Section IV is a 30.8 km segment of the expressway from Pinnaduwa to Godagama. There are 3 interchanges (Imaduwa, Kokmaduwa and Godagama) and 9 bridges in Section IV. China National Technical Import & Export Corporation (CNTIC) was the contractor responsible for implementation of Package 1 and Package 2. It signed an EPC contract on June 11, 2010. It commenced work in April 2011. It completed its work in January 2014 and the Pinnaduwa-Godagama section of the Southern Expressway was opened to traffic on March 16, 2014. Upon completion of the Southern Expressway (STDP) Project, the Asian Development Bank (ADB) conducted a project completion report. It rated the project as “effective” in achieving the expected outcomes, which included an expressway in operational condition and increased economic opportunities for residents in the southern region of the country. The travel time between Colombo and Matara was reduced to 1.5 hours as of March 2014. Also, after the opening of the Southern Expressway, there was a reduction in the fatal accident rate on the Galle Road. In 2010, the accident rate was 25 per 1 million vehicles; in 2011, it went down to 21 per 1 million vehicles, and in 2012 it was 16 per 1 million vehicles. Two new industrial estates (Koggala and Mirijjawila) were set up in the Southern Province and Hambanthota Port and Hambanthota International Airport were built after the STDP project started. While the expressway section from Kottawa to Galle has only been operating since November 2011, the social and economic investments made under the STDP since 2000 have attracted borrower and private sector investment to the Southern Province. Overall, there was an increase in socioeconomic conditions in all three districts in the Southern Province. The four sample villages (Godagama, Kabaragala, Paraduwa, Yaddehimulla) in the ADB’s design and monitoring framework are in Galle and Matara districts. Yakdehimulla and Kabaragala are close to the Galle Port Access Road and the Pinnaduwa Interchange. The other two villages mainly benefited from the section of the Southern Expressway funded by China Eximbank. The ADB’s project completion report notes that there was an increase in socioeconomic conditions in all four villages. This project supported a 30.8 km section of the Southern Expressway from Pinnaduwa to Godagama. There are 3 interchanges (Imaduwa, Kokmaduwa and Godagama) and 9 bridges in this section. This China Eximbank-financed project also supported balance work in Galle Port Access Road. The Southern Expressway is a access-controlled expressway of about 126 kilometers from Kottawa to Godagama. More detailed locational information can be found at https://www.dropbox.com/s/swhrrykgq6tlrtn/sri_lanka_expressway_network_as_at_2019_11_07.jpg?dl=0 and https://www.adb.org/sites/default/files/project-document/81845/26522-023-pcr.pdf.

Additional details

The Chinese project title is 斯里兰卡南部公路发展项目. Package 1 is also known as Highway Section Pinnaduwa to Kodagoda (30km to 45km). Package 2 is also known as Highway Section Kodagoda to Godagama (45km to 61km).

Number of official sources

27

Number of unofficial sources

4