Cabinet approves latest tranche on PM proposal, which takes credit line total to $ 1.2 b
Targets improvement Maho-Anuradhapura-Omanthai railway for economic growth
By Uditha Jayasinghe
Cabinet approval has been given for a $ 318 million credit line from India to develop railways in Sri Lanka’s north and south, bringing the total amount loaned by the Indian Government to $ 1.28 billion.
The latest installment of the credit line was approved on a Cabinet paper submitted by Prime Minister Ranil Wickremesinghe and can be repaid over 20 years with a five-year grace period on an interest rates of 1.75% per annum. Under the loan agreement 75% of goods and services for the projects have to be sourced from India.
The proposed credit line will be provided by the Indian Government through the Export Import Bank of India (EXIM Bank). The Government of India has already provided four credit lines to develop Sri Lanka’s railway sector amounting to $ 966 million and they have been used to improve the southern and northern railway lines and procurement of rolling stocks for Sri Lanka Railways.
“The Ministry of Transport and Civil Aviation has identified that improving passenger transportation facilities is an urgent requirement to attract more passengers toward railway transportation which is efficient and cost effective. Further, reducing congestion in railways by improving rail tracks and signalling systems is also a key requirement to promote passenger and freight transportation,” said the Cabinet paper seen by Daily FT.
From the latest $ 318 million credit line, $ 177 million will be used to purchase rolling stocks for Sri Lanka Railways, which will include six multiple units with air conditioned passenger compartments, 30 oil tank wagons, 160 passenger coaches, 10 locomotives and 20 container carrier wagons.
About $ 70.5 million will be used to upgrade the track from Maho to Anuradhapura. The remaining $ 65 million will be used to develop the railway track connecting Anuradhapura to Omanthai.
“The rehabilitation of proposed railway tracks and improving signalling system from Maho to Anuradhapura and Anuradhapura to Omanthai will reduce the transport operation cost, reduce travel time by minimising congestion, reduce annual railway maintenance cost and stimulate economic activities by ensuring efficient delivery of goods and services between the northern and southern parts of the country,” the Cabinet paper added.
Following Cabinet approval, the Finance Ministry will enter into the agreement on behalf of the Sri Lankan Government.