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Cancellation of Japan-funded LRT project: Govt. yet to pay claims by consultants
The Government has not yet settled a claim of around Rs 5bn from the project consultants for the Japan International Cooperation Agency-funded Light Rail Transit (LRT) for work already done, expenses and loss of profit caused by the cancellation of the project in 2020.
The consultants are a joint venture between Oriental Consultants Global of Japan and Sri Lanka’s Consulting Engineers & Architects Associated. The payments must either be made by a Government institution or through the JICA loan which remains active despite the project cancellation.
Any disbursements already made by JICA will have to be settled, despite the project being called off.
For the first two years, the focus was to work out the detailed design and procurement.
In March 2019, the Sri Lankan Government signed an agreement with JICA for a loan of 30bn Yen (US$ 285mn at prevailing rates) to meet part of the cost of the Colombo LRT. The total project cost was estimated to be 246,641 billion yen (US$ 2.3bn) but this includes land acquisition, administration, interest and taxes which are not financed by the loan.
The consultants started work in early 2019. Their seven-year contract was signed with the Ministry of Megapolis and covers detailed design and related engineering services, procurement assistance, construction supervision, testing and commissioning as well as defect liability check.
In September 2020, however, Presidential Secretary P.B. Jayasundera instructed the Transport Ministry Secretary to terminate the JICA-funded LRT as it was “very costly and not the appropriate cost-effective transport solution for the urban Colombo transportation infrastructure”.
The consultants have not been paid since mid-2020 despite sending the bills to the UDA. A negotiating committee appointed to deal with them has gone back and forth.
At a media briefing to mark the 70th anniversary of Japan-Sri Lanka relations earlier this month, Foreign Minister G L Peiris was asked by a journalist about the termination of the LRT project. He replied that decisions were taken from time to time, they were also reviewed and there was “no harm in admitting that there were situations that could have been handled better”.
JICA was issued a letter saying the project was cancelled owing to a change of priorities with no mention of it being too costly. And while the Government said it would implement the LRT as a public-private partnership (PPP)–there are three other LRT lines they can use this model for–there’s been little movement on this front since JICA funding was called off.
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