$ 2.2 b LRT project suspended with immediate effect

• Govt. suspends LRT project in letter dated 21 September
• Says project is not cost-effective
• Open to a suitable solution

The proposed $ 2.2 billion Light Railway Track (LRT) project has been suspended by the Government with immediate effect.

According to a letter issued by the Presidential Secretariat dated 21 September, the LRT project was suspended with immediate effect and the project office shut down. 

The letter signed by Secretary to the President P.B. Jayasundera and addressed to Transport Ministry Secretary Monti Ranatunga states: “It has been observed that Light Railway Track System is very costly and not the appropriate cost-effective transport solution for the urban Colombo transportation infrastructure.”

The project to set up a 17 km-long LRT line between Colombo and Malabe was to be partially funded with a $ 1.85 billion loan from Japan International Corporation Agency (JICA), at a concessionary interest rate of 0.01%. The loan was repayable within 40 years and had a 12-year grace period.

In March 2019, JICA announced they had signed a loan agreement with Sri Lanka “to provide a Japanese ODA loan of up to 30.04 billion yen for the Project for Establishment of Light Rail Transit System in Colombo (I)”.

However, in June, the Government announced that the project would be carried out as a Private Public Partnership (PPP), converting it from a loan project to an investor project. Government officials also stated a Request for Proposal (RFP) for the project will be prepared by the end of the year.

The same month, JICA Sri Lanka Representative Fusato Tanaka wrote to the Treasury Secretary stating they had not received any official communication in writing for the reviewing of the project and had not agreed to any modifications or cancellations on the loan agreement.

In June, then Cabinet Spokesman Bandula Gunawardena said construction of the track will take place at some point in the future at a lower cost and with fewer disruptions.

The letter suspending the project added that a suitable solution can be worked out with the Urban Development and Housing Ministry and the National Planning Department of the Finance Ministry.