China Eximbank provides $63.574 million buyer’s credit loan for Section A2 of the Colombo-Katunayake Expressway (CKE) Project (Linked to Record ID#71664, #71670, and #71672)

Project narrative

On August 6, 2009, China Eximbank and the Government of Sri Lanka signed four separate buyer’s credit loan (BCL) agreements for the Colombo-Katunayake Expressway (CKE) Project: a $70,041,527 BCL for Section A1 of the CKE Project [ID#BLA0912], a $63,573,815 BCL for Section A2 of the CKE Project [ID#BLA0913], a $47,801,344 BCL for Section A3 of the CKE Project [ID#BLA0914], and a $66,783,314 BCL for Section A4 of the CKE Project [ID#BLA0915]. Each of these China Eximbank BCLs carry the following terms: a 6.3% interest rate, a 15-year maturity, a 3-year grace period, a 0.3% management fee, a 0.3% commitment fee, and a 6% Sinosure insurance premium (exposure fee). The China Eximbank loan for Section A1 disbursed an unknown amount in 2009, an unknown amount in 2010, an unknown in 2011, $14,426,282.25 in 2012, and $21,358,971.76 in 2013. The borrower made repayments worth $5,836,794 (Rs. 774,250,719) in 2015, $5,836,794 in 2018, $5,836,794 in 2019, $5,836,794 in 2020 and $5,836,794 in 2021. The loan's amount outstanding was $46,694,352 as of December 31, 2017, $40,857,558 as of December 31, 2018, $35,020,764 as of December 31, 2019, $29,183,970 as of December 31, 2020, $23,347,176 as of December 31, 2021, and $20,428,779 as of June 30, 2022. The China Eximbank loan for Section A2 disbursed an unknown amount in 2009, an unknown amount in 2010, an unknown in 2011, $13,314,812.08 in 2012, and $19,008,485.07 in 2013. The borrower made repayments worth $5,297,818 (Rs. 702,755,542) in 2015, $5,297,818 in 2018, $5,297,818 in 2019, $5,297,818 in 2020 and $5,297,818 in 2021. The loan's amount outstanding was $42,382,543 as of December 31, 2017, $37,084,725 as of December 31, 2018, $31,786,907 as of December 31, 2019, $26,489,089 as of December 31, 2020, $21,191,271 as of December 31, 2021., and $18,542,363 as of June 30, 2022. The China Eximbank loan for Section A3 disbursed an unknown amount in 2009, an unknown amount in 2010, an unknown in 2011, $10,137,616.45 in 2012, and $14,148,609.12 in 2013. The borrower made repayments worth $3,983,445 (Rs. 528,404,022) in 2015, $3,983,445 in 2018, $3,983,446 in 2019, $3,983,445 in 2020 and $3,983,445 in 2021. The loan's amount outstanding was $31,867,562 as of December 31, 2017, $27,884,117 as of December 31, 2018, $23,900,671 as of December 31, 2019, $19,917,226 as of December 31, 2020, $15,933,781 as of December 31, 2021, and $13,942,059 as of June 30, 2022. The China Eximbank loan for Section A4 disbursed an unknown amount in 2009, an unknown amount in 2010, an unknown in 2011, $13,301,982.78 in 2012, and $20,590,544.83 in 2013. The borrower made repayments worth $5,565,276 (Rs. 738,233,885) in 2015, $5,565,276 in 2018, $5,565,276 in 2019, $5,565,276 in 2020 and $5,565,276 in 2021. The loan's amount outstanding was $44,522,210 as of December 31, 2017, $38,956,934 as of December 31, 2018, $33,391,658 as of December 31, 2019, $27,826,382 as of December 31, 2020, $22,261,106 as of December 31, 2021, and $19,478,467 as of June 30, 2022. The objective of the CKE Project was to design and build a toll-charging four lane expressway that is 25.8 kilometers in length. Section A1 of the CKE Project involved the construction of the 0km-4.5km (0+000 to 4 +500) segment of the expressway. Section A2 of the CKE Project involved the construction of the 4.5km-10.9km (4+500 to 10+900) segment of the expressway. Section A3 of the CKE Project involved the construction of the 10.9km-16.8km (10+900 to 16+800) segment of the expressway. Section A4 of the CKE Project involved the construction of the 16.8km-25.8km (16+800 to 25+800) segment of the expressway. Record ID#71664 captures the $70.042 million BCL for Section A1 of the CKE Project. Record ID#71667 captures the $63.574 million BCL for Section A2 of the CKE Project. Record ID#71670 captures the $47.801 million BCL for Section A3 of the CKE Project. Record ID#71672 captures the $66.783 million BCL for Section A4 of the CKE Project. A contract for the construction of the CKE was initially awarded in October 2000 to a Korean construction company, but it was subsequently terminated in 2003. Then, in 2008, China Metallurgical Group Corporation was awarded a turnkey contract to construct the CKE. The proceeds from the four China Eximbank BCLs were used to pay China Metallurgical Group Corporation for its work on the A1, A2, A3, and A4 Sections of the CKE. The project commenced on August 18, 2009. It was completed and the CKE was opened for public use on October 27, 2013. The CKE links the Sri Lankan capital Colombo with Bandaranaike International Airport, Katunayake and Negombo. The highway has three lanes each way from Colombo to Peliyagoda, and two lanes each way from Peliyagoda to Katunayake. The speed limit is 80 km/h (50 mph) for the first eight kilometers (5.0 mi) and 100 km/h (62 mph) for the rest of the road. The CKE has 42 bridges and 88 culverts including a 480-meter long viaduct at Hunupitiya and an 800-meter viaduct at Katunayake. The opening of the expressway has allowed people to travel between Colombo, the commercial capital of Sri Lanka and Katunayake, the major international airport of Sri Lanka, within 15 minutes. However, the CKE project has also encountered debt 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.