China Eximbank provides RMB 644.4 million government concessional loan for Supply of 13 Diesel Multiple Units for Sri Lanka Railways Project

Project narrative

On March 5, 2010, China Eximbank and the Government of Sri Lanka signed an RMB 700 million government concessional loan (GCL) agreement [ID#1290003032010110253] for the Supply of 13 Diesel Multiple Units for Sri Lanka Railways Project. The face value of the GCL was subsequently downsized to RMB 644,443,837. The GCL carried the following borrowing terms: a 20 year maturity, a 5 year grace period, a 2% interest rate, a 0.5% commitment fee, and a 0.5% management fee. This first disbursement through this loan took place in 2010 and the last disbursement took place in 2014. China Eximbank disbursed RMB 201,269,677.71 (Rs. 3,386,040,296) in 2010, RMB 0 in 2011, RMB 177,586,994.32 (Rs. 3,678,278,808) in 2012, RMB 264,429,640.10 in 2013, and RMB 254,895,013.03 (Rs. 5,405,023,262) in 2014. The loan had achieved a 139.3% disbursement rate (RMB 898,181,325.16 out of RMB 644,443,837) as of December 31, 2014. The borrower made repayments worth RMB 42,962,922 in 2018, RMB 42,962,922 in 2019, RMB 42,962,922 in 2020 and RMB 42,962,922 in 2021. The loan's amount outstanding was RMB 537,036,531 as of December 31, 2017, RMB 494,073,609 as of December 31, 2018, RMB 451,110,687 as of December 31, 2019, RMB 408,147,765 as of December 31, 2020, RMB 365,184,843 as of December 31, 2021, and RMB 343,703,380 as of June 30, 2022. The loan that was issued for this project has encountered repayment problems. On April 12, 2022, the Government of Sri Lanka announced a ‘pre-emptive’ sovereign debt default, noting that it would suspend debt repayments to all external creditors other than multilateral institutions. Its decision to suspend external debt service reportedly affected all China Eximbank loans with amounts outstanding at the time of the announcement. The purpose of the project was to facilitate the procurement of thirteen, Class S12 Diesel Multiple Units (DMUs) for Sri Lanka Railways, and thereby strengthen the passenger transport service of Sri Lanka Railways by adding 13 DMUs to its fleet of rolling stock. Seven of the S12 DMUs were ordered to strengthen long-distance travel on the Main Line from Colombo to Badulla. The steep slopes on the up-country portion of the Main Line make it difficult to operate. Prior to the S12 DMUs, only a few models of locomotives were capable of operating this line. Four of the S12 DMUs were ordered to serve the Kelani Valley Line. Two of the S12 DMUs were ordered to be used for tourist transportation. The thirteen S12 DMUs were scheduled for delivery in four batch by September 2012. CRRC Sifang — a wholly-owned subsidiary of China South Locomotive and Rolling Stock Industry (Group) Corporation — was the contractor responsible for delivery of the DMUs. The first batch of DMUs arrived in Sri Lanka in August 2012. The first Main Line train using a S12 DMU began on October 23, 2012. This project is now complete, but the exact dates of delivery of the second, third, and fourth batches are unknown. This project facilitated the acquisition of Diesel Multiple Units for use on the Main (Railway) Line from Colombo to Badulla and the Kelani Valley Line. The Main Line starts from Colombo and runs east and north past the rapidly developing centres of Ragama, Gampaha, Veyangoda, and Polgahawela. At Rambukkana, the Main Line begins its steep climb into the hills of the upcountry. Between Balana and Kadugannawa, the track clings to the side of sheer cliffs, offering passengers views of Batalegala ('Bible' Rock). From Peradeniya Junction, a branch line reaches Kandy and Matale. The Main Line then continues its climb through tea country, connecting local market centres at Gampola, Nawalapitiya, and Hatton before reaching Nanu Oya. The Main Line continues its ascent to the summit at Pattipola, 1,898 m (6,227 ft) above sea level, before descending past Bandarawela to Badulla. The Kelani Valley line runs southeast from Colombo Maradana Station, through much of the city of Colombo. It runs through major business centres, like Nugegoda and Maharagama, before turning eastwards. It crosses the Southern Expressway near Homagama and continues east towards Avissawella, the current terminus of the line. Major railway stations on the line are Colombo Fort, Maradana, Narahenpita, Nugegoda, Maharagama, Pannipitiya, Kottawa, Homagama, Meegoda, Padukka, Waga, Kosgama, and Avissawella.