A $1.5 billion Light Rail Transit (LRT) project, previously canceled unilaterally by former Sri Lankan leader Gotabaya Rajapaksa, may be considered as a potential future project, according to Japanese Ambassador to Sri Lanka Mizukoshi Hideaki.
Japan recently announced the resumption of 11 suspended projects in Sri Lanka, following the country’s default on sovereign debts and bankruptcy declaration in April 2022. Despite multiple requests from Sri Lanka to resume the LRT project, the Japanese government has not yet committed to it.
“It was not an existing project when the projects were suspended,” Ambassador Hideaki told EconomyNext. “It needs to be considered carefully. We have to monitor the situation of the implementation of ongoing projects. Then we need to consider the economic indicators of Sri Lanka and the profitability of the project and if there are Japanese and Sri Lankan contractors to implement the project.”
The project will be treated as a “new project” and considered only after thorough assessment, should Sri Lanka remain interested.
The cancellation of the LRT project in 2021 by Rajapaksa, without any discussion with Japan or its main funding agency Japan International Cooperation Agency (JICA), strained diplomatic relations between the two countries. Sri Lankan President Ranil Wickremesinghe apologized to the Japanese government in May 2023 during an official visit to Tokyo for the project’s cancellation.
Despite Japan’s agreement to resume various projects halted due to Sri Lanka’s economic crisis, Tokyo has not yet agreed to revive the LRT project. Government officials noted that the Japanese government had made significant efforts to fund the project before its abrupt cancellation. The cancellation, along with another port terminal project agreed with India and Japan, has reportedly hurt diplomatic relations.
Japan has been Sri Lanka’s top provider of concessional financial aid, maintaining mutually beneficial diplomatic ties for seven decades. Sri Lanka has agreed to pay about $3.4 million (approximately one billion Sri Lankan rupees) to a consultancy led by Japanese firms following the sudden cancellation of the LRT project.