PPPs: Hidden debt shadows SL’s future
View(s):Sri Lanka is banking on public private partnerships (PPPs) to rebuild run down infrastructure and draw in foreign investment. But under the celebratory hype, there lies a bleak reality concealing hidden liabilities, weak regulation, and a history of failed projects that can drag the economy further into financial peril.
The Finance Ministry’s Fiscal Strategy Statement 2026 admits PPPs carry “significant fiscal risks,” especially when governments offer debt or revenue guarantees or face costly arbitration. If projects underperform, taxpayers end up paying the price, a pattern economic experts warn Sri Lanka can no longer afford.
Successive governments have showcased PPPs across sectors energy, ports, and water but execution has often faltered. Projects are plagued by opaque contracts, renegotiations, and the absence of a central monitoring system.
The energy sector highlights both promise and peril. Two 350 MW LNG power plants in Kerawalapitiya, deemed vital for electricity stability, have already cost an extra US$ 73 million after renegotiations.
A 50 MW Trincomalee solar project, backed by a sovereign guarantee, remains incomplete with half of CEB’s equity still pending. Meanwhile, mega projects from a 700 MW solar park in Poonakary to vast facilities in Siyambalanduwa and Hambantota are moving forward with private investment.
But analysts warn that without strong safeguards, these ventures could saddle the Treasury with fresh liabilities.
The $ 700 million West Container Terminal-I is operational, but others lag. The $4.2 billion Galle Port development remains stuck at procurement, while the $150 million South Asia Logistics Hub tender was only recently awarded. These projects could fortify Sri Lanka’s maritime competitiveness, but delays highlight bureaucratic lethargy and investor reluctance.
In water management, the Rs. 3.3 billion Non-Revenue Water reduction project in Galle is set to begin in 2025, aiming to cut water losses with private sector help. Yet success will depend on delivery without triggering compensation claims or spiraling costs.
Perhaps most troubling is the absence of a central PPP registry or independent watchdog. Past unsolicited proposals and opaque contracts left the Treasury vulnerable to hidden guarantees and long term fiscal exposure.
The finance ministry now concedes that poorly structured PPPs could jeopardise the country’s fragile fiscal recovery.
A draft PPP Law and a centralised department in the ministry are aimed at standardising risk assessment, improving transparency, and setting up a contingent liabilities register to track hidden obligations.
With borrowing options limited and public finances stretched thin, PPPs are one of the few tools left to fund large scale projects. But without stronger safeguards, they risk becoming what one government official bluntly called a “fiscal time bomb”.
Hitad.lk has you covered with quality used or brand new cars for sale that are budget friendly yet reliable! Now is the time to sell your old ride for something more attractive to today's modern automotive market demands. Browse through our selection of affordable options now on Hitad.lk before deciding on what will work best for you!