Central Expressway Project Section 3 (Pothuhera–Galagedara) Overrun & Delay
Road Development Authority (RDA) / Ministry of Highways•Yahapalana Government (2015–2019) / Gotabaya Rajapaksa Administration (2019–2022)
What Happened?
Strictly neutral, evidence-based factual reconstruction from state audit, parliamentary and court records.
Construction of a 32.5 km expressway link from Pothuhera to Galagedara (Kandy route) initially planned with concessionary financing from the Japan International Cooperation Agency (JICA) and Japanese contractors (Taisei).
Civil construction works and consultancy for 32.5 km 4-lane expressway section.
Complete Section 3 by 2019 using low-interest JICA concessionary credit (approx 0.2% interest rate).
Disagreements over procurement conditions, local sub-contractor allocations, and political controversies led to the cancellation of JICA financing negotiations in 2018. The government transferred financing to a syndicate of domestic commercial banks at domestic commercial interest rates (12%–28%). Hyperinflation, rupee depreciation, and contractor cash shortages caused construction to stall.
The project's estimated cost escalated from Rs. 135 Billion to over Rs. 210 Billion, generating an audited cost overrun of over Rs. 75 Billion, alongside over Rs. 38 Billion in cumulative interest during construction borne by public borrowings.
The Auditor General confirmed that loss of concessionary foreign loans and substitution with expensive domestic commercial credit created an unsustainable debt burden for the Road Development Authority.
The Original Deal
2016-03-15Progress payment certificates over 4-year construction schedule.
Provide direct expressway access from Colombo/Kurunegala to Kandy.
The Actual Cost
SourcedDocumented Financial Consequence
Categorized strictly as a COST OVERRUN rather than a direct financial loss, as construction works remain physically present although incomplete.
Follow the Money: Central Expressway Project Section 3 (Pothuhera–Galagedara) Overrun & Delay
Road Development Authority
Launches Central Expressway Section 3 linking Pothuhera to Galagedara.
Audit Office Report
Procurement Process & Approvals
PARTIALLY COMPLIANT"RDA lacked a comprehensive risk mitigation strategy before canceling international concessionary funding."
Auditor General Observations
UNAUTHORIZED VARIATION"COST OVERRUN & DEFICIENCY: Total estimated cost escalated by over 55% from Rs. 135B to Rs. 210B, with over Rs. 38B incurred in commercial interest payments to domestic banks for an expressway section that remained uncompleted five years after its target deadline."
Prioritize completion of viaduct sections, enforce liquidated damages on delayed contractors, and restructure high-interest commercial bank loans.
COPA Special Inquiry on Expressway Project Delays
Committee urged government to complete Section 3 to allow Colombo-Kandy connectivity, noting massive interest liabilities burdening state banks.
No court cases filed for this record.
No corruption charges documented.
Governance Context & Decision Authorities
Documented for historical infrastructure project management context only.
Approved replacing foreign financing with local state bank loans.
Disbursed loan funds to the Road Development Authority.
No documented beneficiaries established in official judicial findings.
Sourced Chronological Timeline
Every milestone and date is indexed to verified state or judicial documentation.
Section 3 Feasibility and Initial Agreements Signed
Baseline contract value estimated at Rs. 135 Billion.
JICA Concessionary Loan Negotiations Terminated
Government shifts project financing to local commercial bank consortium.
Auditor General Confirms Rs. 75 Billion Cost Overrun
Report documents project cost escalation to Rs. 210 Billion.