Cabinet this week gave approval to seek a Japanese loan of 100 billion yen to construct the third section of the Central High Way from Pothuhera to Galagedara, Cabinet Co-spokesperson Gayantha Karunathilaka said.
The construction of the third section of the Central Highway stretching 32.05 km has been arranged as an Engineering Procurement Contract (EPC) of Japanese contractors under Japanese Banks Financing through a syndicated loan.
The loan is to be obtained at an interest rate of JPY TBOR + 0.95% at a tenure of 15 years including 4 years’ availability period, two years’ grace period and a nine year repayment period, the Cabinet of Ministers were informed.
The Bank of Mitsubishi UFJ Ltd (TMU) now known as MUFG Bank, has been appointed as the Mandated Lead Manager, while Nippon Export Investment Insurance (NEXI) has been appointed as the Credit Agency.
The effective interest rate of the loan is 2.7% per annum inclusive of all related costs, a “relatively favourable” rate, the Ministers were told. The Monetary Board of the Central Bank has recommended the loan facility, outlining the need to take appropriate policy measures to mitigate the short-term monetary implications of the loan, due to its shorter repayment period and high insurance costs.
As part of the loan agreement, the NEXI will be carrying out an Environmental and Due Diligence (ESDD) for the entire project initially, and on several individual sections later.