Sri Lanka eyes BOOT projects to bring private capital to highways

ECONOMYNEXT – Sri Lanka is eyeing public private partnerships on a built own operate transfer (BOOT) mode with gap funding from the government to build a new highway as the country tries to avoid racking up new debt, an official said.

“We want to do a PPP project for an elevated highway from Orugodawatte to Rajagiriya,” Chairman of Sri Lanka’s Road Development Authority Nihal Sooriyarachchi said.

“Rajagiriya to Oruguodawatte and the Rajagirya to Malabe connection we are trying to do on a PPP basis.”

The construction cost of the first section of the highway is estimated at 50 billion rupees. But the cost of shifting utilities now laid underground is about 12 billion rupees for the six kilometer stretch.

Before asking the investor to build the road the RDA will have to clear the pre-construction work.

Building road in a built up city is much more expensive than driving roads in rural areas.

The BOOT investor could get a period of 15 or 20 years, depending on the financial feasibility and revenue projections.

“I think PPP is a viable model,” Sooriyarachchi. “The number of years (concession period) for operations we can vary.

“Rajagiriya to Oruguodawatte and the Rajagirya to Malabe connection we are trying to do on a PPP basis.”

Based on revenue projections the government could also give part of the money as gap funding.

The Road Development Authority has already shortlisted nine contractors/investors after an expression of interest was called in 2017.

Discussions are ongoing with the Treasury to finalize the details of the BOOT model and issued a request for proposals, he said.

Sooriyarachchi says in India, road assets are being ‘re-cycled’ with completed toll roads being packaged and sold to investors and the cash raised from the sale being used to build new roads.

However in Sri Lanka asset sales run into opposition from unions and statist elements. Greenfield projects involving building new assets however would not face the same opposition. (Colombo/Oct29/2019)