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Japan’s Decision Casts Uncertainty on Relaunch of Colombo Light Rail Project

Even after the conclusion of Sri Lanka’s debt restructuring process, uncertainty shrouds the relaunch of the Japan-financed light rail project (LRT), as Japan has opted not to engage in discussions regarding it, according to an official from the Japanese government.

The decision to scrap the $1.5 billion Japanese-funded light rail project for Colombo was made by the Gotabaya Rajapaksa government, citing its exorbitant cost. Originally, the project aimed to alleviate congestion in the city and was being funded through a $1.4 billion soft loan from the Japan International Cooperation Agency (JICA).

However, the government led by President Ranil Wickremesinghe expressed intentions to revive the project and endeavored to persuade the Japanese government to reconsider its implementation.

Kaneko Mariko, the deputy press secretary of the Japanese Foreign Affairs Ministry, disclosed during a meeting with a select group of journalists that the project had been cancelled even prior to Sri Lanka being declared bankrupt. Accompanying Japanese Foreign Minister Yoko Kamikawa during bilateral talks in Colombo, Ms. Mariko stated that although Sri Lanka expressed interest in resuming work, Japan has chosen not to engage in discussions at present. She emphasized that Japanese assistance for any such LRT project would hinge upon Sri Lanka’s debt sustainability and the project’s scale, suggesting that it should be approached as a fresh initiative on new terms.

Ms. Mariko further conveyed that all other stalled projects, including the expansion of the Bandaranaike International Airport (BIA), would recommence upon the signing of the Memorandum of Understanding (MoU) on debt restructuring with creditor nations. Japan, as the chair of the official creditors’ committee on Sri Lanka, emphasized the importance of swiftly concluding the debt restructuring process in a transparent and equitable manner during the discussions.

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