The Government of Sri Lanka is set to award an LKR66.69bn ($528m) highway development contract in the country’s capital city, Colombo, to a Chinese engineering and construction firm Metallurgical Corporation of China.

Approved by the Sri Lankan cabinet, the new project involves carrying out construction works on a section of the Colombo Outer Circular Highway project.

Under the contract, the Chinese firm will build a 9.32km-long stretch from Kadawata to Kerawalapitiya.

The Outer Circular Highway project is 29.22km in length, and is set to be completed in three stages, with construction works on the first stage, which comprises an 11km-long section from Kottawa to Kaduwela, having already commenced.

"The entire scheme will be executed through a loan provided by China’s Exim bank under a turnkey policy."

Phase one of the project has an expected completion date of 31 May 2013.

The entire scheme will be executed through a loan provided by China’s Exim bank under a turnkey policy.

Expected to offer an orbital beltway to bypass the Colombo city and lessen traffic congestion, the new highway project will start from Kerawalapitiya along the Colombo – Katunayake Expressway to connect Southern Expressway crossing A-4 at Kottawa and the primary A-1 Colombo-Kandy highway at Kadawata.

The highway is set to have an operational speed limit of 80km/h and is scheduled to be constructed with four lanes, which will have the provision to be upgraded to six lanes.

In September 2012, Sri Lanka awarded a contract to China State Construction Engineering to build roads and flyovers in Hambantota, a city in the Southern Province.

China is currently carrying out various large-scale projects in Sri Lanka, including highways, ports, airports and a coal power plant.