Japan has conveyed its intention to resume Japanese projects in Sri Lanka contingent upon the island nation shouldering the financial responsibility of the Colombo Light Rail Transit Project (LRT). The message was delivered by Japanese Finance Minister Suzuki Shunichi during his two-day official visit to Sri Lanka, where he engaged with the President and the opposition leader.
The Colombo Light Rail Transit Project, initially planned to be completed with a Japanese concessional loan of $1.5 billion, was abruptly canceled during the administration of former President Gotabaya Rajapaksa. The decision was justified on the grounds that the project was not deemed a "profitable solution" to the capital's congestion. The project, which aimed to cover a distance of 15.7 km with 16 stations, had received a $285 million loan agreement for its first phase signed by the Secretary of the Ministry of Finance on behalf of the Japan International Cooperation Agency (JICA) and the Government of Sri Lanka. The loan terms included a repayment period of 40 years with a grace period of 12 years at a concessional interest rate of 0.1 percent.
Following President Ranil Wickremesinghe's visit to Japan in May of the previous year, discussions with Japanese Prime Minister Fumio Kishida were held regarding the potential revival of the Colombo LRT Project. In alignment with these discussions, President Wickremesinghe submitted a proposal to reactivate the project to the Cabinet on June 3.
However, the recent visit by Japanese Finance Minister Suzuki Shunichi unveiled a twist in the tale. Minister Shunichi informed President Wickremesinghe of the resumption's contingent condition – Sri Lanka would need to cover the financial burden of the Colombo LRT Project to unlock further Japanese investments. This ultimatum potentially jeopardizes the prospects of several Japanese projects in the country.
As part of his official visit, Minister Shunichi also met with the opposition leader, Sajith Premadasa, at the Parliament premises. The discussions presumably delved into the financial complexities surrounding the Colombo LRT Project and its implications for the broader cooperation between Japan and Sri Lanka.
