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Sri Lanka and Japan agree to resume stalled bilateral projects including LRT 

June 08, Colombo (LNW): Sri Lanka and Japan agreed to resume stalled bilateral projects including a US $1.5 billion Japanese-funded light railway following the signing of the Official Creditor Committee (OCC) agreements signed next month.

The Government is working to restructure its foreign debt as part of a $2.9 billion bailout from the International Monetary Fund (IMF), after its worst financial crisis in more than seven decades in Sri Lanka.

It is confident of concluding the necessary agreements in time to complete the next IMF review, Japan expects the early signing of a Memorandum of Understanding (MoU) between Sri Lanka and the official creditor committee appointed to assist in restructuring Sri Lanka’s bilateral debt, which Japan co-chairs, finance ministry sources said.

The Sri Lanka government has taken a cabinet decision recently to resume the Japan International Cooperation Agency (JICA)-funded US$2.2 billion ‘Light Rail Transit (LRT) project, stretching from Malabe to Colombo Fort which was abruptly terminated by the previous regime, Presidential Secretariat sources divulged.

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

The Urban Development Authority (UDA) will call for expressions of interests soon  from interested international firms or joint venture companies to build the necessary infrastructure and implement the project, Urban Development and Housing Minister Prasanna Ranatunge disclosed. 

It has ben planned to operate the light rail transit service to complete the journey from Malabe to Colombo Fort in 30 minutes.

On the advice of the then President Gotabaya Rajapaksa, Presidential Secretary Dr. P.B. Jayasundera had instructed the Ministry of Transport Services Management to review and terminate the project and close the project office with immediate effect.

He cited the reason for this action and a subsequent cabinet decision in favour of it to the high cost incurred for the LRT project and it was not being the appropriate cost effective transport solution for the Urban Colombo transportation infrastructure.

The consultants started work in early 2019. Their seven-year contract was signed with the Ministry of Megapolis and covered detailed design and related engineering services, procurement assistance, construction supervision, testing and commissioning as well as defect liability check.

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 & 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.

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