China company lands $1 bln highway project in Sri Lanka

China is deepening involvement in Sri Lanka's massive infrastructure development with state-run China Merchant's Group earmarked to build a 1 billion U.S. dollar expressway that will kick off later this year, an official said Wednesday.

The northern expressway is considered to be the largest highway project embarked upon by the Sri Lankan government to date, aimed at linking the former war torn north through the tourist hot spot of Kandy to capital Colombo. When completed, the highway is expected to be about 300 km in length.

Construction of the first phase of about 48 km is expected to begin in August and will be done under the Build Own Transfer (BOT) system, Highways Ministry Secretary Ranjith Premasiri told Xinhua.

"The feasibility study has been completed and a Memorandum of Understanding (MoU) has been signed with the company. We are discussing details of tax holidays and land allocation presently," he added.

It was earlier reported that the construction of the first 100 km of the Northern Expressway was awarded to two China Merchant group companies, China Merchant Holdings International (CMHI) and China Merchant Huajin.

The venture was earlier reported to be funded by China Development Bank. The first phase stretch will have five interchanges, 50 overpasses and 30 underpasses.

CMHI are also in charge of a 500-million-U.S. dollar expansion of the Colombo harbor, which is also under the BOT system.

The first phase is estimated to cost 1 billion U.S. dollars and will take a minimum of 18 months to complete, he added.

On March 15, Sri Lankan President Mahinda Rajapaksa will ceremoniously open a 30.81 km extension to the Southern expressway also funded by China EXIM Bank. The cost of the highway extension is 18.7 billion rupees (about 139 million U.S. dollars).

The third phase of the Southern expressway will be handed over to China National Aero-Technology Import and Export Corporation ( CATIC) for construction.

China remains involved in almost all the large scale projects taking place. Some of the biggest projects include a 1.3-billion-U. S. dollar coal power plant on the north western shore as well as a host of other investments in the south of the country that are estimated to exceed 4 billion U.S. dollars, including a 1.2- billion-dollar harbor.

Railways, highways, airports and more are all part of this development push that has been actively pursued by President Mahinda Rajapaksa's government with support from China. Tourists from China are also becoming a major focus between the two countries.