Japan seeks interest on delayed LRT compensation payments

By Ajith Siriwardana and Yohan Perera

Colombo, July 23 (Daily Mirror) - Japan has requested the Sri Lankan government to pay interest on the delayed settlement of compensation arising from the cancellation of the Japan-funded Light Rail Transit (LRT) project, in addition to the compensation already paid in three installments during 2024, 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 paid 189.7 million Japanese yen on August 23, 2024, US$1.031 million on August 27, 2024, and Rs. 108.7 million on September 24, 2024, as compensation to the Japanese side following the cancellation of the project.

However, the Minister said Japan has subsequently sought interest on the delayed compensation payments, maintaining that the amounts were not settled on time. He said a committee has been appointed to examine the request and that no interest payment has been made so far.

Explaining the circumstances surrounding the cancellation of the LRT project, Ratnayake said the Cabinet had decided to terminate the project on September 24, 2020.

He said the decision followed observations made by the Director General of the Overseas Assets Management Division during discussions held on September 18, 2020, who had concluded that the project was not cost-effective.

Based on those observations, the Presidential Secretary issued a letter on September 21, 2020, recommending that the project be cancelled, citing its high cost and the view that it was not the most cost-effective solution to address Colombo's urban transport needs.

The Japan-funded LRT project, which was intended to ease traffic congestion in the Colombo metropolitan area, was formally cancelled in 2020, prompting compensation claims from Japanese contractors and consultants. The latest demand for interest on the delayed compensation payments represents another unresolved financial issue stemming from the project's cancellation.