(UDHAYAM, COLOMBO) – The Ministry of Strategy and Finance of South Korea has approved $ 200 million for the Kandy tunnel construction project.
The project comprises four tunnels with a total length of 5.5 km 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 a 40-year repayment period including a 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 traffic congestion at the centre of Kandy by constructing bypass tunnels for many vehicles wanting to go to the West or the East of Kandy without entering Kandy Lake Road.
After being built, the tunnel is expected to reduce the passing time from Suduhumpola to Tennekumbura from two hours to less than 30 minutes during rush hour traffic. Doing this, the Kandy tunnel will save money by limiting extra fuel consumption and 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 A1 road to Colombo where container terminals for export are located.
The Kandy tunnel construction project does not have only economic meaning but also has a diplomatic bearing. The Korean Government’s decision to provide $ 200 million for this project comes at a significant time as 2017 is the 40th anniversary of diplomatic relations between Sri Lanka and South Korea.
The Export-Import Bank of Korea (Korea Eximbank) provides Official Development Assistance (ODA) loans through the 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 $ 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 $ 386 million both for trade between Sri Lanka and Korea and for Korean companies’ foreign direct investments in Sri Lanka.
