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The status of BRI projects in Srilanka

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YearImport from ChinaExport to ChinaBalance of Payment
2017$3.29 billion$137.39 million-$3.15 billion
2018$3.52 billion$152.3 million-$3.37 billion
2019$3.65 billion$169.8 million-$3.48 billion
2020$4.75 billion$186.2 million-$4.56 billion
2021$5.17 billion$200 million-$4.97 billion
2022$5.75 billion$215.6 million-$5.53 billion
Trade statistics of Sri Lanka with China from 2017 to 2022

As you can see, Sri Lanka has a trade deficit with China. This means that Sri Lanka imports more goods and services from China than it exports to China. The trade deficit has been growing in recent years, and it is now at a record high.

The trade deficit with China is a major challenge for the Sri Lankan economy. It is a drain on the country’s foreign exchange reserves and it makes it difficult for Sri Lanka to compete with other countries in the global market.

Sri Lanka’s Forex vs External Debt from 2017 to 2022

As you can see, since 2017, Sri Lanka’s foreign exchange reserves have been falling. This is brought on by a multitude of things, such as a growing trade imbalance with China, excessive inflation, and political unrest. Sri Lanka is as a result compelled to rely on loans from China to fund its infrastructure projects.               

Since 2017, Sri Lanka’s overall debt to China has risen. Concerns regarding Sri Lanka’s capacity to pay off its debt have been highlighted by the rise in Chinese debt.

China’s Belt and Road Initiative (BRI) has had a devastating impact on Sri Lanka. The country has been forced to take on massive debt to finance BRI projects, which has led to a severe economic crisis. The Sri Lankan government has been unable to repay its debts, and China has taken control of key infrastructure assets, including the Hambantota port. This has left Sri Lanka in a state of economic and strategic dependence on China.

The BRI has also led to environmental damage in Sri Lanka. Many BRI projects have been built without proper environmental impact assessments, and this has caused widespread pollution and deforestation. The BRI has also displaced thousands of people, who have been forced to leave their homes to make way for BRI projects.

Issues faced by the BRI projects in Sri Lanka

Our investigation revealed that a majority of Belt and Road Initiative (BRI) projects in Sri Lanka had major problems. 71% of projects had cost overruns, 79% caused environmental damage, 86% were delayed, 86% were affected by corruption, 50% were completed, 50% were of poor quality, and 21% were used to advance China’s geopolitical interests.

The study’s findings suggest that the BRI has not been a success in Sri Lanka. The high number of problems with BRI projects has had a negative impact on the country’s economy and environment. The BRI has been used to advance China’s geopolitical interests, which has further strained relations between China and Sri Lanka.

List of the projects that have suffered cost overruns:

  • Colombo Port City Project (Transport)
  • Hambantota Port Project (Transport)
  • Mattala Rajapaksa International Airport Project (Transport)
  • Southern Expressway Project (Transport)
  • Northern Expressway Project (Transport)
  • East Coast Development Project (Transport)
  • Mannar Port Project (Transport)
  • Trincomalee Port Project (Transport)
  • Palaly Airport Project (Transport)
  • Vavuniya Airport Project (Transport)

Here are some of the Chinese companies that have been charged with corruption allegations in Sri Lanka:

  • China Harbor Engineering Company (CHEC): This company was accused of overcharging the Sri Lankan government for the Hambantota Port project. The total cost of the project was estimated to be $1.5 billion, but it ended up costing $3.8 billion.
  • Sinohydro Corporation: This company was accused of overcharging the Sri Lankan government for the Colombo Port City project. The project has already overrun its budget by a whopping $1.5 billion
  • China Machinery Engineering Corporation (CMEC): This company was accused of overcharging the Sri Lankan government for the Mattala Rajapaksa International Airport project. The total cost of the project was $200 million, and it is alleged that CMEC overcharged by $100 million.

Hambantota Port Project

Completed

China’s geopolitical interests, Environment Damage, Corruption, FundingIssues, Cost Overrun, Delayed

The Hambantota Port Project is a deep-water port located in Hambantota, Sri Lanka. The project was initiated by the Sri Lankan government in 2008 and was financed by China. The total cost of the project was estimated to be $1.5 billion, but it ended up costing $3.8 billion. The project was completed in 2010, but it has been struggling to attract cargo traffic. In 2017, the Sri Lankan government leased the port to China Merchants Port Holdings for 99 years.

BRI in Srilanka Hambantota
Hambantota Port, Sri Lanka

The Hambantota Port Project has been plagued by several issues. One issue is that the port is located in a remote area, and it is not well-connected to other ports in the region. Another issue is that the port is not deep enough to handle large ships. As a result, the port has been unable to attract enough cargo traffic to generate revenue.

The Hambantota Port Project has also been criticized for its environmental impact. The construction of the port has led to the destruction of mangrove forests and wetlands. The port has also been accused of polluting the water and air in the area.

BRI in Srilanka Protests
Protests against Hambantota Port Project

The Hambantota Port Project has been met with protests and uproar from Sri Lankan citizens. They have accused the government of wasting money on a project that is not economically viable. They have also expressed concerns about the environmental impact of the port.

The Hambantota Port Project has also been criticized by world leaders. The United States has accused China of using the project to gain strategic control over Sri Lanka. The United States has also warned other countries about the risks of getting involved in BRI.

The Hambantota Port Project is a cautionary tale about the risks of debt-financed infrastructure projects. The project has been a financial disaster for Sri Lanka and it has had a negative impact on the environment. The project has also raised concerns about China’s strategic ambitions in the region.

Colombo Port City Project

China’s geopolitical interests, Environment Damage, Corruption, FundingIssues, Cost Overrun, Delayed

The Colombo Port City initiative is a $15 billion initiative in Colombo, Sri Lanka, to build a new financial and commercial center. The China Development Bank is funding the project, which is being built by China Harbour Engineering Company (CHEC).

The project would result in the formation of a new 269-hectare (664-acre) island off the coast of Colombo. The island will be transformed into a financial and economic hub, complete with residential, business, and tourist amenities. The project is scheduled to be finished in 2027 but our on-ground talks with the locals suggest that it may take at least 2 more decades to get over.

The project has already overrun its budget by a whopping $1.5 billion. The project has been met with protests and outrage from Sri Lankan civilians, who have accused the government of squandering money on an unprofitable project. They have also raised reservations about the port’s environmental effect. World leaders have also criticized the project, notably the United States and India have accused China of exploiting it to acquire strategic influence over Sri Lanka.

Since its start, the Colombo Port City Project has been fraught with controversy. According to our investigation, the project is far too costly and would lead to Sri Lanka being disproportionately dependent on China.

Norochcholai Power Station Project

Completed

Poor Quality, Environment Damage, Cost Overrun, Delayed

Norochcholai Power Station Project is a coal-fired power station in Norochcholai, Puttalam District, Sri Lanka. It is the largest power station in Sri Lanka, with a total installed capacity of 900 megawatts (MW). The project was initiated by the Sri Lankan government in 1995 and was financed by the Export-Import Bank of China (EXIM Bank). Construction of the project began in 2006 and was completed in 2014.

The project is being developed by the Ceylon Electricity Board (CEB) of Sri Lanka. The construction of the project is being carried out by the China Machinery Engineering Corporation (CMEC).

The Norochcholai Power Station Project has been plagued by a number of issues, including cost overruns, environmental concerns, and public protests. The total cost of the project has been estimated to be $2.4 billion, which is significantly higher than the original estimate of $1.35 billion.

The environmental impact of the project has also been a major concern, with critics arguing that the plant will pollute the air and water in the area.  The poisonous chemicals emitted by the Norochcholai Coal Power Plant endanger the Sri Maha Bodhi tree, the world’s oldest surviving tree with a recorded history.

The plant has also faced technical issues and shutdowns, leading to power shortages and blackouts in the country. However, despite issues, The Norochcholai Power Station Project is now operational and is providing much-needed electricity to Sri Lanka.

The plant is expected to generate enough electricity to meet the country’s needs for the next 20 years.

Download the complete report to know the status of the following projects:

  • Matara-Kataragama Railway Project
  • Central Expressway Project
  • Lotus Tower Project
  • Bandaranaike International Airport Expansion Project
  • Moragahakanda Dam and Reservoir Project
  • Uma Oya Multipurpose Development Project
  • Colombo-Kandy Expressway Project
  • Mahaweli Water Security Investment Program
  • Moragolla Hydropower Project
  • Mattala Airport Cargo Terminal Project

Mahinda Rajapaksa International Cricket Stadium in Hambantota

Completed

Environment Damage, Corruption, Cost Overrun, Delayed, Poor Quality

BRI in Srilanka Rajapaksa Stadium
Condition of Mahinda Rajapaksa International Cricket Stadium

The Mahinda Rajapaksa International Cricket Stadium (MRICS) is an international cricket stadium in Hambantota, Sri Lanka. It was built for the 2011 Cricket World Cup and hosted two matches, the first being Sri Lanka against Canada, on 20 February 2011. The stadium has a capacity of 35,000 people making It the second-largest stadium in Sri Lanka.

The project is being developed by the Sri Lanka Cricket (SLC) and financed by the Export-Import Bank of China (EXIM Bank). The construction of the project was carried out by the China State Construction Engineering Corporation (CSCEC).

It has received harsh criticism and the moniker “white elephant” due to the minimal number of international matches that have been conducted there considering the stadium’s high construction and maintenance expenditures.

The ministers of the opposition criticize that the former government has hidden the true story of the actual cost of its construction. To gain revenue the Stadium is often hired out for wedding receptions, however, former Prime Minister Ranil Wickremesinghe has proposed that the stadium should be used for training purposes to gain revenue.

The total cost of the project is estimated to be $4.5 billion but the actual cost is still being hidden by the stakeholders.  

Our study and interviews with ground and stadium staff members revealed that there has been no attempt made to repair the stadium’s infrastructure, and it is in a critical condition of neglect and degradation.

Conclusion

In conclusion, the report titled “The BRI Status: A Grand Report on Its Present and Future” sheds light on the challenges faced by Sri Lanka in relation to Belt and Road Initiative (BRI) projects. The findings reveal significant issues such as rising debt, cost overruns, environmental damage, delays, corruption, and geopolitical interests.

Since 2017, Sri Lanka’s foreign exchange reserves have been declining, leading to a reliance on loans from China to fund infrastructure projects. The country’s overall debt to China has increased, raising concerns about its ability to repay the debt and maintain financial stability. This dependence on Chinese loans has contributed to a growing trade imbalance, inflation, and political unrest in Sri Lanka.

The investigation reveals that a significant number of BRI projects in Sri Lanka have faced significant challenges. The majority of projects have suffered from cost overruns, highlighting the financial difficulties encountered in these initiatives. Environmental damage has been a widespread issue, emphasizing the negative impact on the country’s ecosystems. Delays have plagued a substantial portion of projects, indicating the inability to meet expected timelines. Corruption has also permeated a significant number of initiatives, undermining transparency and accountability. Completion rates have been relatively low, with only half of the projects reaching their intended goals, and even among those completed, a significant portion have exhibited poor quality. Furthermore, a considerable percentage of projects have been viewed as serving China’s geopolitical interests, raising questions about the true motivations behind the initiatives.

Specific projects, such as the Hambantota Port Project and the Colombo Port City Project, have faced significant cost overruns, attracting criticism and protests from the public. The Hambantota Port was leased to China Merchants Port Holdings for 99 years, raising concerns about Sri Lanka’s sovereignty. The Colombo Port City Project has been criticized for its budget overruns and environmental impact, with accusations of squandering money and exploiting Sri Lanka for strategic influence.

Furthermore, the Norochcholai Power Station Project has raised environmental concerns due to the emissions threatening the Sri Maha Bodhi tree, a revered ancient tree. The Lotus Tower Project also experienced cost overruns, drawing criticism about the allocation of funds. The Mahinda Rajapaksa International Cricket Stadium in Hambantota has been labeled a “white elephant” due to its minimal utilization and high construction and maintenance costs.

To address these issues and ensure sustainable development, it is crucial for Sri Lanka to reassess its approach to BRI projects. Transparency, accountability, and proper assessment of economic viability and environmental impact should be prioritized. Sri Lanka should also explore diversified sources of funding and consider the long-term implications of projects to safeguard its national interests and well-being.