Sri Lanka trying to swap Chinese infrastructure loans to equity: minister

Nov 03, 2011 (LBO) – Sri Lanka wants to swap debt to equity at some of its Chinese funded projects to reduce repayment pressure in the future, minister for international monetary co-operation Sarath Amunugama said. Sri Lanka has taken Chinese loans to build port, road and airport infrastructure. Many of the loans are from Exim Bank of China. Sri Lanka is in talks with China to swap the debt taken to build a coal power plant in Norochcholai in Northwest Sri Lanka, he told a forum on taxation organized by Sri Lanka’s Institute of Policy Studies.

“We are trying to negotiate it, starting with the Norochcholai project but move to others also,” he said.

“If we can convert many of these loans to equity we will not only have financial benefit but also better management,”

The first 300 MegaWatt stage of the Norochcholai plant was built with 455 million dollars. The second stage of 600MW is financed with an 891 million dollar loan.

He said another coal plant built with India’s NTPC is already structured as a joint venture with equity partnership.