Sri Lanka has halted a Japan funded light rail project for the capital Colombo as it was too costly and brought low returns, government ministers said.

The light rail project was expected to solve the traffic problem in the key Colombo to Malabe corridor and also several other corridors in other stages.

“The project was not halted by Japan but the government of Sri Lanka,” Information Minister Bandula Gunewardene told reporters in Colombo.

Minister Ramesh Pathirana said the project was deemed to be high cost and brought low returns.

Sri Lanka signed a 30 billion yen concessionary loan with the government of Japan in March 2020 for the projects.

He said many buildings will be affected as a result of the LRT.

However the Japan International Corporation at the time said by building the LRT on towers – as is done in other built-up cities – disruptions would be minimized. In built-up cities, urban transit systems are either built on towers or underground.

Minister Gunewardenes claims that the project would be awarded to a Chinese company at a 6 percent interest rate compared to a lower rate by Japan may be made by those who would stand to benefit from the light rail project.

There had been concerns that halting rail projects which have solved traffic problems and made urban transit from Bangkok to Delhi more efficient would have long term negative fallouts in urban pollution and productivity.