Figures are in: 19,000 vehicles used the Katunayaka Expressway in the first 24 hours giving gate receipts of Rs5.1M flashed accross all the newspapers this morning, and all of you are completely fooled as always. In pure numbers it is a complete flop!! Why?
Anyone can tell you that this is not sustainable 24/7 365 days a year. If it was, then the Revenue would be, Rs5.1M X 365 = Rs 1.86 Billion per annum. So for my calculation let us assume it is sustainable.
Now the cost of the Expressway was US$300M (only the Chinese part and SL Govt contribution, excluding all previous abortive attempts) I am not sure what the exact rate of interest is or the payment terms, but if after all these years, interest must have accumulated to the capital and the balance outstanding must be far in excess of that. Be that as it may, let us say for our argument that it is only US$300M that has to be paid, principal and interest on it.
If we assume a low interest rate of 7%, then the interest alone will be US$21 Million. After all, we have been informed that China is lending to us at far higher rates of interest like 8.5% on US$ borrowings, when they lend to the United States at 1% (effective interest rate received on their holdings of trillions of dollars of US Treasuries. We will assume we had concessionary rates for this - fat hopes!
This amount of interest at Rs133 = US$1 the current exchange rate is Rs 2.79B per annum. This gives a shortfall of Rs 930M per annum, without accounting for the budgeted maintenance of the Expressway of Rs 450M per annum, excluding any road re-surfacing that is required every 5 years, depending on the wear and tear, and if shoddy building materials have been used and pot holes start appearing soon (what’s the bet?) if will be sooner! This gives a MINIMUM LOSS of Rs 1.38B per annum.
What do you expect when the cost per KM has been published at Rs1.8B per KM, one of the most expensive roads in the history of road building in the world.
If you say that this social cost of Rs1.5B per annum is worthwhile as it will give a far greater social and economic benefit to the economy, by infrastructure, then who pays the capital cost? Add that to the social cost I guess!!When will people realize that Sri Lanka is wasting too much of the people’s money on road construction? This Govt. is responsible for making extremely poor decisions on handing out contracts at inflated prices to earn kickbacks for themselves.
I am NOT implying that this is NOT required in Sri Lanka. They are. However is someone engaged in Highway Robbery of the Nation? Let us all get together to stop it.