Sri Lanka’s arbitrary decision to terminate the Japanese-funded, US$ 2.2 billion Colombo Light Rail Transit (LRT) project, stretching from Malabe to Colombo on the directions of presidential secretary Dr. PB Jayasundera has now been referred to the cabinet of ministers for conclusion.

Accordingly, the cabinet will take the final decision on the termination of the Light Rail Transit (LRT) System project.

Secretary to the Ministry of Transport Monti Ranatunga said that President’s Secretary Dr. P.B. Jayasundera, on the advice of President Gotabaya Rajapaksa, had instructed the Ministry of Transport Services Management to review and terminate the project and close the project office with immediate effect.

In a letter addressed to Ranatunga on Monday (21), President’s Secretary Jayasundera cited the high cost incurred for the LRT project and noted that it was not the appropriate cost effective transport solution for the Urban Colombo transportation infrastructure.

Ranatunga said as Sri Lanka was facing difficulties in repaying existing loans due to the COVID-19 pandemic, the Ministry of Transport Services Management was advised to review several projects launched under loans, and has decided to terminate or postpone many projects.

The Ministry is considering the termination of the LRT project, while alternative solutions to the terminated or postponed projects will be considered in due course.

The LRT project was initially launched under the Urban Development Authority, but under the new Government, it falls under the Ministry of Transport Services Management, he elaborated.

Monti Ranatunga further said the final decision on the termination of the Colombo LRT project will be taken by the cabinet.

The Light Rail Transit System project, which was to be funded by the Japan International Cooperation Agency (JICA), was suspended by the Government in June 2020 citing costs.

The project was initiated by the former Government with a plan to ease traffic congestion through the LRT which was to be operated from Fort to Malabe and Athurugiriya, via Sri Jayewardenepura.

In a strongly worded letter to the Treasury Secretary in June this year, JICA’s Sri Lanka Representative  Fusato Tanaka expressed “great shock” at hearing that the current Government has decided not to obtain JICA loans and instead to implement the project as a Public Private Partnership, and that necessary action would be taken to select a private investor.

The Government will have to incur a loss of around US$ 100 million if the LRT project is suspended or if there is a delay as a result of renegotiations. The entire project is currently scheduled to be completed by early 2025.

In addition, there will be certain penalties from the Japan International Cooperation Agency (JICA) – the funding agency of the project – as Sri Lanka has already signed an agreement on the project, a senior official closely connected to negotiations with JICA revealed.

The total consultancy cost of the project is estimated at around US$ 140 million for seven years, including the feasibility review, detailed design, evaluation assistance, and construction supervision inclusive of all government taxes.