The Hon. Bimal Rathnayake - Minister of Transport, Highways, Ports and Civil Aviation and Leader of the House of Parliament

¶ 01 Hon. Speaker, thank you for the opportunity.

¶ 02 When we assumed office, work on the Central Expressway project was stalled. The project comprises: 1) Kadawatha–Mirigama, 2) Mirigama–Kurunegala, 3) Potuhera–Rambukkana, and 4) Rambukkana–Galagedara.

¶ 03 Only the Mirigama–Kurunegala section had been completed and opened. Since Kadawatha–Mirigama was incomplete, the full benefits could not be realized. Prolonged suspension especially burdened Gampaha District residents with flooding, disruption, and environmental damage.

¶ 04 History of the Kadawatha–Mirigama section: - On 04 Aug 2015, without any financing arrangement or proper agreement, the then Government signed—without calling tenders—a contract with a Chinese contractor for only 4 km of the 37 km stretch. - When financing could not be secured within one year (as required), instead of lapsing, on 20 June 2016 the same contractor was given, again unsolicited, the remaining 32 km. By 2019, financing still had not been secured; the contract was extended five times, with conditions unchanged. - Critically, the exchange rate clause fixed conversion of rupee invoices to USD at the 2015 rate of LKR 135 per USD for all future payments. Thus, even when the market rate in 2022 was ~LKR 370 per USD, payments were converted at LKR 135, inflating the USD amounts payable to the contractor. This highly adverse term was embedded in the 2015 agreement.

¶ 05 - On 22 Mar 2019, China EXIM Bank agreed in principle to a buyer’s credit. Work actually commenced on 15 Sep 2020—five years after contract signature—still under the 2015 terms. - On 12 Apr 2022, following the sovereign debt suspension, China EXIM suspended disbursements. By Aug 2023, works fully stopped; outstanding certified bills were USD 189.51 million. By late 2024, daily interest on arrears payable to the contractor was around LKR 20 million.

¶ 06 Upon taking office, we moved to restart the Kadawatha–Mirigama section: - Cabinet Decision No. AMP/25/0754/809/056 of 19.05.2025 appointed two committees. Reports were submitted on 04.08.2025 and 02.09.2025; Cabinet Paper No. 40/2025 presented them on 02.09.2025. - Cabinet Decision AMP/25/1659/809/056-1 of 08.09.2025 approved settling the rupee value of USD 189.51 million in arrears; LKR 57 billion was paid on 15.09.2025 due to lack of EXIM disbursements at that time. - Under the loan agreement, China EXIM has now agreed to provide a Yuan-equivalent facility of USD 500 million.

¶ 07 Why proceed with the existing contractor? - Estimated costs if we continue: • Interest on arrears: LKR 34 billion • Time-extension related costs: ~LKR 8 billion • Balance works: ~LKR 175 billion • Total: ~LKR 217 billion - If we terminated and re-procured: • Termination and demobilization costs, plus imported materials/equipment costs already incurred: ~LKR 88 billion • Plus balance works, interest, and claims—bringing the total to ~LKR 263 billion • That is ~LKR 46 billion more than continuing, aside from further time and legal risks.

¶ 08 False claims circulating on social media say the section will cost LKR 450 billion and LKR 12 billion per kilometre. The Kadawatha–Mirigama section is 36.475 km; the current average cost is ~LKR 6.29 billion per km. The higher figure is driven by the egregious 2015 exchange-rate clause and subsequent delays caused by earlier economic mismanagement.

¶ 09 We remain committed to completing this long-delayed public investment efficiently, minimizing additional fiscal damage, and transparently disclosing the facts behind past irregularities.