A Chinese loan of more than US$ 69 million or about Rs 8.9 billion for a hydro power project is on hold until Sri Lanka pays up a fee of more than Rs. 627 million to China’s state owned insurance company. The demand for this fee is notwithstanding sovereign guarantees the Sri Lanka Government has offered. The move highlights how Chinese state agencies are exercising what appeared to be great caution and adopting maximum security for funding projects in Sri Lanka. The state-owned China National Electric Equipment Corporation (CNEEC) had offered Sri Lanka US$ 69,723,605.35 through the Industrial and Commercial Bank of China (ICBC). This constitutes 85 per cent of the Broadlands Power Project. According to the Ceylon Electricity Board (CEB), the hydropower Project is a “run-of-river type project planned on the Kelani Ganga to harness the hydro potential down- stream of the existing Polpitiya power station. For the release of the loan, the Chinese state firm has said that seven per cent of the loan of over US$ 48 million or over Rs. 627 million should be paid to another state venture Sinosure. This company has been described as the Chinese government’s insurance agency. It is only thereafter that the loan would be released.]]>

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