Sri Lanka to revive scrapped Japan-funded LRT project

The Sri Lankan government has decided to initiate diplomatic discussions with Japan on the revival of the Japan-funded Light Rail Transit (LRT) project.

The Cabinet of Ministers on Tuesday (July 04) approved a proposal made by President Ranil Wickremesinghe on the matter.

Accordingly, the government will prepare a timeframe to revive the previously scrapped LRT project and enter into an agreement following discussions with the Japanese diplomatic mission in Colombo.

In March 2019, the Japanese government agreed to grant loan assistance of USD 1,800 million for the LRT system project which was to be implemented that year and completed by 2026, as a solution for the traffic congestion in the city of Colombo and its suburbs.

Japan International Cooperation Agency (JICA) had agreed to provide financial facilities under concessionary credit conditions while the Oriental Consultants Global Company of Japan had agreed to provide consultancy services in collaboration with several other companies.

On March 11, 2019, Japan and Sri Lanka signed the loan agreement and exchanged notes pertaining to the project, which had been designed to construct a 17km-long elevated rail track including 16 stations to cover important and major intersections from Malabe to Colombo Fort.

Under the project, it had been proposed to deploy 25 trains for the service and each unit was supposed to comprise four air-conditioned passenger compartments to accommodate 800 passengers

The total estimated cost of the project was Japanese Yen 246,641 million, and JICA was to provide JPY 200,415 million (approximately USD 1,800 million) as a concessionary loan. The company had provided the facility of paying the said loan over a period of 40 years including a grace period of 12 years and the annual interest rate thereon was 0.1 percent.

However, in September 2020, the then-Cabinet of Ministers gave the nod to terminate the project citing heavy operating costs, and environmental damage among other reasons.

A report compiled by the National Audit Office in December 2022 revealed that Sri Lanka incurred a loss of Rs. 5,978 million after former President Gotabaya Rajapaksa-led government unilaterally terminated the LRT project.

In May 2023, the current Cabinet of Ministers decided to green-light the revival of the project days before President Wickremesinghe departed for Japan for an official visit. The decision was taken in a bid to restore Sri Lanka’s credibility with the international community.