Govt.’s learning curve ending, project momentum building: Construction sector

• Notes govt.’s under-spending on state capex a traditional challenge
• Cites Rs.390bn in allocated funds not injected into economy through vital projects yet
• Insists govt. to prioritise implementation of critical projects

By Nishel Fernando

A top construction industry leader voiced cautious optimism for Sri Lanka’s construction sector, suggesting the government’s initial “learning curve” is now over and is anticipating a new sense of urgency in project implementation.

Speaking at a panel discussion hosted by First Capital Research, Access Engineering PLC Executive Deputy Chairman Christopher Joshua highlighted that while significant hurdles remain, there are signs of positive momentum for the much-needed rollout of infrastructure projects.

However, this optimism is tempered by deep-seated issues that have long plagued the sector. Joshua drew sharp attention to the government’s chronic under-spending on state capital expenditure (capex), a problem he described as a traditional challenge for the industry.

This issue was starkly illustrated in the previous fiscal year. 

“The government did an audit where the capital expenditure targeted just to spend within the financial year of 2024 was about Rs.800 billion, out of which they ended up only spending about 51 percent,” Joshua revealed. This significant spending gap meant over Rs.390 billion in allocated funds failed to be injected into the economy through vital projects.

According to him, the bottleneck is not a lack of funds, but a failure in execution. He emphasised that substantial funding lines are already in place, not just from the national treasury but also from multilateral partners such as the Asian Development Bank (ADB), World Bank, and the Japan International Cooperation Agency (JICA). As an example, he noted the ADB’s second rural road programme is already worth approximately US$ 900 million. “There’s a lot of money to be spent,” he stated, but lamented that “the machinery is not moving fast enough to spend them.”

Procurement delays were identified as a major and persistent hurdle. Joshua cited the critical Bandaranaike International Airport (BIA) expansion project—a cornerstone for achieving the nation’s tourism goals—as a prime example. Despite funding of US$ 700 million being pledged by Japan and the tender process taking place last year, the contract award has still not been made.

 «You know we are pretty, pretty stretched out at the airport,” he added, underscoring the urgency.

Despite these challenges, Joshua concluded on a hopeful note. He acknowledged that the government, upon its establishment, had to undertake a necessary process of taking stock and prioritising projects. With that phase largely complete, the expectation is for accelerated action.

“I think this learning curve is now over, that’s what we feel,” he asserted. “We will see urgency in getting these much-needed infrastructure projects and also rural projects going. We are quite optimistic of this sector.”