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LRT project in Sri Lanka hangs in the balance due to Japan’s reluctance to resume it

By: Staff Writer

May 07, Colombo (LNW): The Sri Lanka government plan’s to resume the JICA funded US$2.2 billion ‘Light Rail Transit (LRT) project, stretching from Malabe to Colombo Fort abruptly terminated by the previous regime is on the balance due to Japan’s reluctancy to resume it soon. 

Kaneko Mariko, the deputy press secretary of the Japanese Foreign Affairs Ministry said , the project was cancelled even before Sri Lanka was declared bankrupt . She was accompanying Japanese Foreign Minister Yoko Kamikawa who was in Colombo and held bilateral talks on Saturday.

Ms. Mariko said Sri Lanka sought to resume work but Japan decided not to discuss it at this juncture. She said the Japanese assistance for any such LRT project would depend Sri Lanka’s debt sustainability and the scale of it. Also, she noted that it should be a fresh project on new terms.

However, she said all the other projects stalled due to the economic crisis would resume upon the signing of the Memorandum of Understanding (MoU) on debt restructuring with the creditor nations. These projects include the expansion of the Bandaranaike International Airport (BIA).

On September 21, 2020, Dr. P.B. Jayasundara, in his capacity as then Secretary to President Gotabaya Rajapaksa, has directed the Transport Ministry Secretary to terminate the project immediately.

 He stated thatthe LRT system was costly and “not an appropriate or cost-effective transport solution for the urban Colombo transportation infrastructure.

The present administration is set to renew the LRT project contract with JICA loan facility due to its favourable conditions including low interest rates and the grace period of 12 years which was completely ignored by the previous regime

This unilateral action has not only stained the friendly relations with Japan but also its benefits to ease traffic congestions and fiscal support for the cash strapped country hit by economic crisis.

 The government is yet to take any action to terminate the loan agreement with Japan International Cooperation Agency (JICA), the Auditor General’s special report revealed.

The Government has not yet settled a claim of around Rs 5 billion from the project consultants Oriental Consultants Global of Japan and Sri Lanka’s Consulting Engineers and  Architects Associated for the work already done, expenses and loss of profit caused by the cancellation of the project in 2020.

Sri Lanka’s Auditor General has confirmed this claim adding that after loan agreement number 2019011 linked to the LRT was scrapped following a policy decision, a consultancy contract was terminated and the firm has demanded a sum of Rs.5.89 billion for losses and damages.

The total consultancy cost of the project is estimated at around US $ 140 million for seven years, including the feasibility review, detailed design, evaluation assistance, and construction supervision inclusive of all government taxes.

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