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Monday December 5th, 2022

Sri Lanka plans US$4bn PPP for LRT in place of Japan funded soft-loan project

Artists rendition of the cancelled Japanese funded project

ECONOMYNEXT – Sri Lanka plans to request proposals to fund a 2.2 billion US dollar light rail transit project after cancelling a Japanese soft-loan project, which will also involved up to 2.0 billion dollars of related investments, a top official said amid concerns that the project will be a non-starter.

Sri Lanka is preparing documents to request proposals from international investors to build the LRT which will run from Colombo’s Fort area to fast growing suburbs in Malabe and Athurugiriya, via the administrative capital of Sri Jayewardenepura.

Competitive Bids

“We will call international competitive bids,” Priyath Bandu Wickrama Secretary, Ministry of Urban Development, Water Supply & Housing Facilities told reporters in Colombo.

Sri Lanka opted for a Japanese soft-loan after earlier studies indicated that it was difficult to run the project as a purely commercial venture based on traffic projections.

Another LRT line which was opened for private investors by last administration had drawn interest including from Chinese firms but they had wanted ‘viability payments’ or gap-funding from the tax-payer.

But Wickreme said the project had been altered to allow the investors in the Public Private Partnership to also build mixed developments and housing projects, which will bring additional revenues.

“These will easily draw 2.0 billion US dollars of investments,” he said.

He said model RFP documents were already available from an earlier project and he hoped to call for RFPs before the end of the 2020.

This would allow the project to proceed by May 2020, as originally planned, he said. In the meantime, land acquisition and other work could proceed.


Sri Lanka had already signed a 270 million dollar equivalent loan tranche with Japan International Co-operation Agency (30 billion yen) and preliminary work has been done when the project was changed. The loan has a 12 year grace period and 40 year payback and yen interest rate of 0.1 percent.

A 130 million dollar contract had been signed with a project consultancy. Sri Lanka was planning to terminate it at the first milestone after negotiations, Wickrama said.

Traffic along the Fort to Malabe corridor has been slowing for many years and extra line and a overhead bridge had been built to speed up flows, though new vehicles are coming in as soon as traffic speeds up.

Sri Lanka was to borrow the equivalent of 1.85 billion US dollars from Japan and put in the balance funds to take it up to 2.2 billion US dollars.

Wickrama said the project had been altered to take a depot in Malabe which involved a costly 55 hectare concrete yard for rolling stock to Athurugiya, which will add 8 kilometres to the 16 kilometre original line within the same cost.

Another change to the project would be to replace fully concrete overhead track with an ‘open track’ he said.

He said bidders to another project indicated that per kilometre costs would be lower.


However private firms will also have to get near commercial rates of interests which tends to sharply push up costs, compared to a Japanese soft loan with a long grace period.

Sri Lanka’s credit rating was downgraded to ‘B-‘ in 2020, and Sri Lanka’s sovereign debt is also trading below par amid monetary instability.

In many countries private operators run rapid transit systems under concessions after initial state support to build the track.

One of the few private lines is the first Sukhumvit line of Thailand’s BTS Skytrain which was developed as a completely privately owned project with no state support other than right of way and is routed through several real estate projects of the main promoter.

A part of its revenue comes from advertising.

Analysts say an option for Sri Lanka would be to go ahead with the current project, which is already in progress and give rolling stock operations to a private operator who can make lease payments years to help repay the loan when the grade period ends.

The traffic from the Malabe line which interconnect could also make other lines more viable for private development. (Colombo/June25/2020)

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Paris Club proposes 10-year moratorium on Sri Lanka debt, 15 years of debt restructuring

ECONOMYNEXT — The Paris Club group of creditor nations has proposed a 10-year debt moratorium on Sri Lankan debt and 15 years of debt restructuring as a formula to resolve the island nation’s prevailing currency crisis, India’s The Hindustan Times reported.

While the Paris Club has yet to formally reach out to India and China, Colombo has yet to initiate a formal dialogue with the Xi Jinping regime, the newspaper reported on Saturday December 03, inferring that the chances of the International Monetary Fund (IMF) approving its 2.9 billion dollar extended fund facility for Sri Lanka in December now ranges from very low to nonexistent.

“This means that Sri Lanka will have to wait for the March IMF meeting of the IMF before any aid is extended by the Bretton Woods institution,” the newspaper reported.

“Fact is that for Sri Lanka to revive, creditors will have to take a huge hair cut with Paris Club clearly hinting that global south should also take the same cut as global north notwithstanding the inequitable distribution of wealth. In the meantime, as Colombo is still to get its act together and initiate a dialogue and debt reconciliation with China, it will need bridge funding to sustain the next three month before the IMF executive board meeting in March 2023. Clearly, things will get much worse for Sri Lanka before they get any better—both economically and politically,” the report said. (Colombo/Dec04/2022)

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Sri Lanka’s Ceylon tea prices up amid low volumes

ECONOMYNEXT – Sri Lanka tea prices picked up at the last auction in November amid low volumes, brokers said.

“Auction offerings continued to record a further decline and totalled 4.2 million Kilograms, of which Ex-Estate offerings comprised of 0.6 million Kilograms. There was good demand,” Forbes and Walker Tea brokers said.

“In the Ex-Estate catalogues, overall quality of teas showed no appreciable change. Here again, there was good demand in the backdrop of extremely low volumes.”

High Growns

BOP Best Westerns were firm to 50 rupees per kg dearer. Below best and plainer types were Rs.50/- per kg easier on last.

Nuwara Eliya’s were firm.

BOPF Best Westerns were firm to selectively dearer. Below best and plainer teas declined by 50 rupees per kg.

Uva/Uda Pussellawas’ were generally firm and price variances were often reflective of quality with the exception of Select Best Uva BOPF’s which were firm and up to 50 rupees per kilogram dearer.

CTC teas, in general, were mostly firm.

“Most regular buyers were active, with perhaps a slightly more forceful trend from the local trade,” brokers said.

Corresponding OP1’s met with improved demand. Well-made OP/OPA’s in general were fully firm, whilst the Below Best varieties and poorer sorts met with improved demand. PEK/PEK1’s, in general, were fully firm to selectively dearer.

In the Tippy catalogues, well-made FBOP/FF1’s sold around last levels, whilst the cleaner Below Best and cleaner teas at the bottom appreciated. Balance too were dearer to a lesser extent.

In the Premium catalogues, very Tippy teas continued to attract good demand. Best were firm to selectively dearer, whilst the Below Best and cleaner teas at the bottom appreciated

Low Growns

Low Growns comprised 1.8 million Kilograms. Market met with improved demand, in general.

In the Leafy & Semi Leafy catalogues, select Best BOP1/OP1’s were fully firm, whilst the Below Best/bolder BOP1’s were barely steady.

Low-grown teas, farmed mainly by smallholders and exported to the Middle East and Central Asia, are the most sought-after and expensive Ceylon Teas.

Low-grown CTC prices have gained this week to 982.80 per kilogram this week from 934.76 per kilogram last week.

Few Select best BOP1s maintained, whilst best and below best were irregularly lower. Poorer types maintained.

BOPF’s in general, firm market.

FBOPF/FBOPF1’s select best and best increased in value, whilst the below best and bottom held firm.

Selected best BOP1’s maintained, whilst best and below best were irregularly lower.Poorer types maintained.

OP1’s selects best together with best and below best were firm to dearer. Poorer sorts were fully firm.

Medium Growns

BOPF’s, select best gained by 50 rupees per kilogram. Others maintained.

BOP1’s select best dearer by 100 rupees per kg whilst all others moved up by 50 rupees per kg.

OP1: select best gained by 100 rupees per kg whilst all others dearer by 100 rupees per kg.

OP/OPA’s in general, dearer by 50 rupees per kg whilst the poorer sorts were firm.

PEK’s Select best gained by 50 rupees per kg whilst all others maintained. PEK1: In general, dearer by 50 rupees per kg. (Colombo/Dec 04/2022)



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Sri Lanka Ports Authority East Terminal contractor paid: Minister

ECONOMYNEXT – Sri Lanka’s Ports Authority had paid a deposit for a gantry crane and made the required payment for the contractor to complete building the East Container Terminal, Minister Nimal Siripala De Silva said.

The East Container Terminal, a part of which is already built is being completed as a fully SLPA owned terminal at a cost of 480 million dollars Ports and Shipping Minister de Silva said.

“ECT we are funding with money available in the ports authority,” he said.

“Up to now we have paid an advance for the gantry crane. And for the construction we have paid all the money agreed with the contractor. So that is going on well.”

Sri Lanka is undergoing the worst currency crisis in the history of the island’s soft-pegged (flexible exchange rate) central bank which has created difficulties in funding the project.

“Every penny we collect as dollars we are keeping them separately and utilizing that for the Eastern Terminal work,” Minister de Silva said.

“We are confident that the ECT will be completed within the envisaged time. It is a difficult task in view of the dollar problem.

Banks were also not releasing the dollar deposits of the SLPA earlier but are now doing so, he said.

“Our deposits in banks they have utilized for urgent other national purposes,” he said.

“So they are releasing that money slowly. I am happy that they are releasing that money little by little. So with that we will be able to manage that.”

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