President Anura Kumara Dissanayake has informed the Cabinet that local companies bidding for major development projects—such as expressways—will be required to secure funding from foreign sources instead of relying on domestic banks.
He emphasized that allowing local contractors to obtain loans from state banks could limit the government’s ability to fund other key initiatives such as rural road development projects.
The directive comes as the government moves ahead with completing the first phase of the Central Expressway project between Kadawatha and Mirigama, in partnership with China Metallurgical Group Corporation (MCC), a state-owned Chinese construction firm. The decision to proceed with MCC was taken despite earlier proposals by the Road Development Authority to hand over the stalled project to local contractors.
Deputy Highways Minister Prasanna Gunasena stated that practical constraints led to the renewed engagement with MCC and the decision to obtain funds from China’s EXIM Bank. He also noted that although MCC had not yet signed a loan agreement, it was selected due to its flexibility in negotiating revised interest rates and facilitating repayment in Chinese yuan instead of U.S. dollars.
Minister Gunasena further explained that continuing work with MCC allows the project to utilize the same heavy equipment previously used, avoiding additional procurement costs.
The project had been suspended in April 2022 following Sri Lanka’s sovereign debt default, prompting China’s EXIM Bank to halt loan disbursements. Some portions of the expressway infrastructure have reportedly deteriorated due to prolonged delays, and penalty costs have already reached LKR 20 million.
Spanning 37 kilometers, the Kadawatha-Mirigama section is the first stage of the Central Expressway. The original loan agreement with China’s EXIM Bank was signed in March 2019. The government now plans to recommence construction by next month.
