Sri Lanka’s government is to sign an agreement with Japan International Cooperation Agency (JICA), for a JPY 200 billion (USD 1.83 billion or LKR 347 billion) loan to build a light rail transit system.
A government statement said the Cabinet of ministers had approved a proposal by Finance Minister Mangala Samaraweera to begin negotiations with JICA for the loan. The loan is to fund the first 17 kilometres track of the LRT connecting Colombo’s city centre with the suburbs.
Sri Lanka will build a light rail transit service between Colombo Fort and Malambe to ease the congestion in the country’s capital city.
The Finance Ministry said the funds will be borrowed at the concessionary interest rate of 0.1 percent, to be repaid within a 40-year period with a 12-year grace period.
The loan will be given in 6 installments between 2019 and 2024. Sri Lanka will get USS 260 million as the first installment. Technical assistance for the 17 kilometres long rail project with 16 stops will also be provided by JICA.
The project will operate under the Megapolis and Western Development Ministry, and the work is expected to begin shortly.
The traffic in Colombo and the suburban areas has worsened in recent years with more and more people gathering to cities looking for better economic prospects.
It was estimated that 18.38 percent of Sri Lanka’s total population in 2017 lived in urban areas and cities.
Although a light railway system may address the congestion on the roads of Colombo to a certain extent, the financial viability of such a project, if it is to be run by the State, is yet to be determined.