Sri Lanka gets 40 year repayment period for tunnel

Sri Lanka has received a 40 year repayment period including 10 year grace period for the funds to be obtained from Korea to build a tunnel in Kandy.

The Ministry of Strategy and Finance of Korea has approved US$ 200 million for the Kandy tunnel construction project, the Embassy of Korea in Sri Lanka said.

The project comprises of 4 tunnels with a total length of 5.5km from Suduhumpola to Tennekumbura via Bogambara and Ampitiya which will be the longest tunnel in Sri Lanka. Korea Eximbank will finance this project with a very concessional EDCF loan of 0.15% interest rate and 40 year repayment period including 10 year grace period. The project executing agency will be the Ministry of Highways and Higher Education of Sri Lanka whereas the project implementing unit will be the Road Development Authority (RDA).

The main objective of the project is to ease the traffic congestion at centre of Kandy by constructing by-pass tunnels for many vehicles wanting to go to the West or the East of Kandy without entering Kandy lake road.

After established, the tunnel is expected to reduce the passing time from Suduhumpola to Tennekumbura from 2 hours to less than 30 minutes at rush hours. Therefore, the Kandy tunnel will save colossal waste of money due to extra fuel combustion and increased air pollution near the Sri Dalada Maligawa (Temple of the Sacred Tooth Relic). In addition, the tunnel may boost the economy of Kandy by providing a short connection between the Kandy industrial zone and the road (A1) to Colombo where container terminals for export are located.

The Kandy tunnel construction project does not have only economic meaning but also diplomatic meaning. Korean government’s decision to finance US$ 200 million for this project comes at a significant time as this year 2017 marks the 40th anniversary of diplomatic relations between Sri Lanka and the Republic of Korea.

The Export-Import Bank of Korea (Korea Eximbank) provides Official Development Assistance (ODA) loans through EDCF (Economic Development Cooperation Fund) for international development and cooperation. The bank provided its first ODA loan for the rehabilitation of the Colombo-Galle road (A2) in 1990. As of now, the Bank has approved US$ 805 million for 28 development projects in Sri Lanka.

Korea Eximbank also provides financing for international trade and overseas investment, to promote bilateral economic cooperation. Since 1978, Korea Eximbank has provided US$ 386 million both for trade between Sri Lanka and Korea and for Korean companies’ foreign direct investments in Sri Lanka. (Colombo Gazette)