Home » Sri Lanka – Japan begin talks to resume Light Rail Transit project

Sri Lanka – Japan begin talks to resume Light Rail Transit project

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Sri Lanka is to resume talks with Japan today Monday 02 in the New Year in an effort to mend fences with the friendly donor country by  restarting the JICA funded US$2.2 billion ‘Light Rail Transit (LRT) project.

The newly appointed transport ministry secretary Priyantha Mayadunne said that he will consider this task as first duty in the New Year after assuming new office this morning.   

He noted that this metro rail service from Malabe to Colombo Fort abruptly terminated by the previous regime is very important to ease traffic congestion in the Colombo city limits.

The new 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

On the advice of the then President Gotabaya Rajapaksa, Dr. Jayasundera had instructed the Ministry of Transport Services Management to review and terminate the project and close the project office with immediate effect on September 20 2020.

This project has been cancelled according to a cabinet memorandum submitted on September 24, 2020.

He cited the reason for this action and a subsequent cabinet decision in favour of it was 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.

According to the Auditor General’s Department, it has been revealed during a special audit regarding the cancellation of the project that the amount of Rs. 6 billion spent on the project until then has been wasted.

In addition to the above expenses, the Japanese consulting company has demanded Rs. 5.16 billion, including the consultancy fees provided until the termination of the project and the loss caused to them by the cancellation of the project without any prior discussion.

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

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.

In the Special Audit Report, the AG disclosed that the Department of External Resources had informed JICA that the loan amount would be utilised for another development project

The total project cost was estimated to be 246,641 billion yen (US$ 2.3 billion) but this includes land acquisition, administration, interest and taxes which are not financed by the loan.

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