Japan has requested Sri Lanka to pay interest over delays in settling compensation arising from the cancellation of the Japan-funded Light Rail Transit (LRT) project, Transport, Highways and Urban Development Minister Bimal Ratnayake told Parliament yesterday.
Responding to a question raised by Samagi Jana Balawegaya (SJB) MP Chaminda Wijesiri, Ratnayake said Sri Lanka had already made three compensation payments in 2024 following the cancellation of the project.
According to the Minister, payments of 189.7 million Japanese yen were made on 23 August 2024, US$1.031 million on 27 August 2024 and Rs. 108.7 million on 24 September 2024.
However, Ratnayake said the Japanese side subsequently sought interest on the compensation, claiming that the payments had not been settled within the required period.
He said a committee had been appointed to examine the request, adding that no interest payment had been made so far.
Explaining the circumstances surrounding the termination of the LRT project, Ratnayake said the Cabinet decided to cancel it on 24 September 2020.
He said the decision followed observations made by the Director General of the Overseas Assets Management Division during discussions held on 18 September 2020, concluding that the project was not cost-effective.
Based on those observations, the Secretary to the President issued a letter on 21 September 2020 recommending the cancellation of the project, citing its high cost and the assessment that it was not the most cost-effective solution to Colombo’s urban transport requirements.
The Japan-funded LRT project, designed to ease traffic congestion in the Colombo metropolitan area, was subsequently terminated in 2020, resulting in compensation claims related to the cancellation.
Japan’s latest request for interest on the delayed compensation payments remains under consideration by the Government.
