- Decision expected within two weeks as cost estimates soar; project termination and fresh agreement under review
The Sri Lankan government is currently weighing the option of terminating the existing contract for the Kadawatha–Mirigama stretch of the Central Expressway and entering into a fresh agreement, even if it means paying over US $40 million in compensation to the original project company.
According to senior government sources, officials are assessing the financial and legal implications of cancelling the ongoing agreement and replacing it with a restructured deal under revised terms. A final decision is expected within the next two weeks.
The current contract for this stretch—also known as Phase 1 of the Central Expressway—was first signed in 2015 and updated in 2016. However, the project has experienced long delays and remains stalled, despite a US $989 million loan agreement with China EXIM Bank that was supposed to cover 85% of the contract value.
Since its initiation, the projected cost has more than doubled, prompting government stakeholders to reconsider the feasibility of continuing under the original terms.
Deputy Minister of Transport and Highways Dr. Prasanna Gunasena confirmed that officials are in the process of determining the compensation to be paid if the project is scrapped.
“Terminating the current project and starting anew may be the more practical route for the government,” he said. “In that case, compensation would be necessary, and it’s expected to exceed US $40 million.”
He added that regardless of the final decision, constructing the Kadawatha–Mirigama stretch remains a key infrastructure priority. “We are committed to completing this vital section. Whether under a renewed agreement or through the existing contract, the project will proceed,” he stated.
The original contract had been awarded to the Metallurgical Corporation of China (Ltd), a prominent state-owned Chinese construction firm.
In contrast to the stalled Phase 1, other phases of the expressway have made considerable progress. The Mirigama–Kurunegala segment (Phase 2) is already completed and operational, while the extension from Kurunegala to Kandy is currently under construction.
The Kadawatha–Mirigama link is considered a strategic segment in alleviating traffic congestion around Colombo and boosting transport links to Sri Lanka’s central provinces. Yet with spiraling costs and nearly a decade of delays, authorities are now compelled to revisit the original deal’s terms and chart a more sustainable path forward.
