Helping Sri Lanka Or Helping Themselves? Flip Side Of Chinese Generosity

by Ashwin Hemmathagama

Total value of concessionary loans, aid, and the grants offered by China during the past four years have exceeded US$3,836 million payable between 14 to 20 year period; subjected to different interest rates agreed between 1.53% and 6.5%, the statistics released by the Ministry of Finance and Planning disclosed. Some may see this financing as a part of the much wanted development pledged in MahindaChinthana political manifesto or as a rescue plan for the regime to overcome the international economic pressure brewing over the alleged human rights violations.

According to the Government of Sri Lanka, the Chinese financed the key development programs here including the road construction, port construction, power generation, water supply, irrigation, other infrastructure development, and supply of equipment, machinery, and vehicles necessary for these projects. However, this assistance was not limited to financing but also forced Sri Lanka provideemployment opportunities for over 1,700 Chinese personnel now engaged in 42 projectsthroughout the island.

In reality, most of these credit facilities came with conditions much stiffer than employing Chinese personnel but also to buy everything from raw materials to machinery from China and also to contract the Chinese firmsto execute and manage. In certain cases the sub-contractors are also from China, which leave little room for the Sri Lankans industries to capitalize or to sustain the grassroots.

Any country embarking on massive infrastructure depend onlow interest rates for long repayment periods, known as the soft loans prefers the World Bank, Asian Development Bank, and similar multilateral lenders or from any other bilateral state donors. However, the Chinese rates stands well above these agencies but of course lesser than the average commercial lending rates.An attractive solution for any borrower with questionable credit ratings and Governance issues. The ulterior goal of a soft loan is to complete the respective project on time and to use it for propelling the economic development in both macro and micro levels. Unfortunately instead of helping the Government to pump money into the Sri Lankan grassroots the Chinese financing will recycles all back to China as agreed in the contract.

Project

Agreement signed

Type

Value Rs.

Chinese at work

Reconstruct tsunami affected fisheries habours

01.02.2005

Grant

1,800 million

-

Construct leader’s statues at BMICH

18.04.2005

Grant

24 million

-

Coal Power Plant – Puttlam

30.08.2005

Loan

30,246 million

60

-do-

08.09.2006

Loan

15,903 million

Coal Power Plant – Puttlam (2nd stage)

25.12.2009

Loan

101,909 million

Economic & technical assistance

30.08.2005

Grant

621 million

-

Feasibility studies on selected roads

05.12.2006

Grant

6.3 million

-

Economic & technical assistance

15.03.2006

Grant

255 million

-

Assistance for sports in South Asia

-do-

Grant

44.6 million

-

Infrastructure development in identified roads

20.04.2006

Grant

1,026 million

-

Upgrading facilities at BMICH

-do-

Grant

6.45 million

-

Technical assistance to maintain BMICH

21.10.2006

Grant

6.65 million

-

Economic & technical assistance

22.12.2006

Grant

550 million

-

-do-

27.07.2007

Grant

698.8 million

-

Providing of 100 passenger train yards

15.05.2007

Loan

3,003 million

28

Supply of 15 diesel powersets

-do-

Loan

4,290 million

53

Maintenance of BMICH

13.06.2007

Grant

798 million

120

Hambantota Port

30.10.2007

Loan

34,209 million

154

Bunkering and dockyard at Hambantota

06.08.2009

Loan

7,479 million

17

Colombo Katunayake express – A1

-do-

Loan

7,305 million

500

Colombo Katunayake express – A2

-do-

Loan

8,047 million

Colombo Katunayake express – A3

-do-

Loan

5,492 million

Colombo Katunayake express – A4

-do-

Loan

7,673 million

Repairs of high courts complex

25.08.2009

Grant

3.3 million

-

Equipment and instruments

23.11.2009

Grant

276 million

-

Mattala Airport

05.03.2009

Loan

21,793 million

-

Providing 13 diesel engines to Sri Lanka Railway

-do-

Loan

11,735 million

20

Providing two MA60 aero planes

09.09.2010

Loan

4,635 million

-

Electricity project for North

-do-

Loan

3,569 million

101

-do-

-do-

Loan

8,006 million

-do-

-do-

Loan

4,792 million

Rehabilitation project in North

-do-

Loan

4,822 million

-do-

-do-

Loan

8,502 million

-do-

-do-

Loan

7,957 million

Economic & technical assistance 2010

17.11.2010

Grant

836 million

-

Development of priority roads 1

16.12.2010

Loan

16,951 million

91

Development of priority roads 2

31.03.2010

Loan

55,196 million

422

Southern Express Way

17.02.2011

Loan

8,347 million

133

 

-do-

-do-

Loan

7,006 million

Reconstruction of Mannar Road

29.04.2011

Loan

5,313 million

-

-do-

-do-

Loan

8,042 million

-

Electricity supply for Uva province

19.07.2011

Loan

2,729 million

-

 

 

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