The Japan International Cooperation Agency (JICA) has signed an agreement with the Government of the Democratic Socialist Republic of Sri Lanka in Colombo to provide a Japanese ODA loan of up to JPY30.04bn (£204m) for the construction of light rail transit (LRT) system in the national capital.
The project is being taken up to boost the transportation capacity and improve the safety and comfort of public transportation by introducing an LRT system with 16 stations over 15.7km of track in and around Colombo.
The project is also aimed at improving the urban environment through a reduction in air pollution and other traffic pollution and to stimulate socio-economic activities in the area.
Special Terms for Economic Partnership (STEP) will apply to the Japanese ODA loan for the project.
Japanese technology, including rolling stock and electromechanical equipment for the LRT, will be used in the project.
STEP refers to special assistance terms for promoting the visibility of Japanese aid through a transfer of Japanese technology and expertise to developing nations.
The main contract is Japan tied and subcontracting is general untied.
In such an arrangement, although the main contract allows a joint venture with the borrowing country in addition to the Japanese company and its subsidiary with an overseas presence, the Japanese company must be the leading partner.
The repayment period of the loan is 40 years, with a grace period of 12 years.
The Sri Lankan Ministry of Megapolis and Western Development is the executing agency of the LRT project.
Under the planned implementation schedule, the project is scheduled for completion in April 2026, when the facilities are put into service.
Letters of invitation for the consulting services, including detailed design work, have been issued in July 2018.
The tender announcement for an initial construction package is expected to be released in March 2020.
Image: Japan to lend £204m for light rail project in Sri Lanka. Photo: Courtesy of JC Gellidon on Unsplash.