Light rail project: Govt. shifts track from JICA to unnamed entity

Following the decision by the Japan International Cooperation Agency (JICA) to suspend its financial support for a 220 kilovolt underground cable project from Kerawalapitiya to the Colombo port, a new controversy has arisen over the Government's intention to abandon Japanese funding for the Light Rail Transit (LRT) project in favour of a public-private partnership (PPP) with a yet-unnamed entity.

Government Ministers and officials publicly said this week that Sri Lanka would not proceed with JICA funding for the LRT project from Pettah to Malabe and that a PPP was on the cards. Cabinet Spokesman Bandula Gunawardena was among those who declared that the project was “off ”.

“We are not going ahead with that,” Co-Cabinet Spokesman Ramesh Pathirana also told the Sunday Times. When it was pointed out that the loan agreement with JICA was already signed, he said it was only the consultancy component that was initialled.

“No contracts were awarded,” he said. “As for the consultancy agreement, that’s water under the bridge.”

But JICA said, as far as it knew, the LRT has so far been “implemented steadily” in accordance with the relevant loan agreement. The agency “hopes that the project continues to be implemented based on the bilateral agreements”.

“The project was formulated through extensive studies conducted by international and local consultants spanning several years based on the official request from the Government of Sri Lanka,” said a response from the agency to questions from the Sunday Times. “JICA has made every effort to formulate the project and loan terms and conditions to maximise benefit to the people of Sri Lanka.”

Meanwhile, it was also confirmed that JICA recently wrote to the Ministry of Finance saying it has suspended funding for a new transmission line until the clarification of several policy matters--including Sri Lanka’s current debt situation and the new Government’s financial policy.

The Sunday Times reported exclusively last week that the Government’s request for JICA backing for a 220 kilovolt underground cable from Kerawalapitiya to the Colombo Port was turned down.

While seeking funding, Sri Lanka also asked Japan for a moratorium on its debt and reported that it could not proceed with the LRT for the next five years because the Government did not have borrowing space.