• Cabinet approves outstanding payment for consultancy firm

The Urban Development and Housing Ministry is considering the possibility of restarting land acquisitions for the Light Rail Transit (LRT) project, with the project most likely to be kicked off with funding from Japan, The Sunday Morning learns. 

Speaking to The Sunday Morning, Urban Development and Housing Ministry Secretary W.S. Sathyananda said that the ministry was currently considering the possibility of restarting land acquisitions for the construction of the LRT. 

“Acquisitions had begun previously, before the project was halted. We are looking to restart from where they were stopped. We are also checking what can be done with the local funding for the project,” said Sathyananda. 

According to him, the Government had made a policy decision to proceed with Japanese funding for the LRT. 

“However, the funding isn’t confirmed yet as debt restructuring has just been finalised. We hope to re-enter discussions with JICA officials,” he said. 

In 2021, the Government led by former President Gotabaya Rajapaksa unilaterally cancelled the Japan International Cooperation Agency (JICA)-funded LRT project, which was estimated to cost about $ 1.5 billion. 

With Sri Lanka defaulting on its foreign debt in 2022, all other funding from the bilateral lender also ceased. 

However, last week’s finalisation of the debt restructuring agreements with Sri Lanka’s bilateral lenders opened up avenues for foreign funding again. 

Foreign Affairs Minister M.U.M. Ali Sabry, who is on a visit to Japan, posted on X on Wednesday (3) that he had discussed issues related to the immediate resumption of suspended projects with JICA’s senior management. 

When the project was cancelled by the former Government, reports showed that the Government had not settled an outstanding payment to the project consultants for work they had already completed. 

“The outstanding payment is ready and is awaiting Cabinet approval and Treasury/External Resources Department approval,” said Sathyananda. 

However, the Secretary could not confirm the exact amount of the payment. Previous reports show that the outstanding payment was about Rs. 5 billion. 

The project was initiated by the Government led by former President Maithripala Sirisena, under the then Megapolis and Western Development Ministry in 2017 and intended to build a light rail transport system for Colombo. 

During his visit to Tokyo in May 2023, President Ranil Wickremesinghe apologised to the Japanese Government for the unilateral cancellation of the project.