The Japan International Cooperation Agency (JICA) signed a loan agreement on 11th March 2019 with the Government of the Democratic Socialist Republic of Sri Lanka in Colombo to provide a Japanese ODA loan of up to 30.04 billion yen (US$ 0.27 billion) for the Project for Establishment of Light Rail Transit System in Colombo.

The objective of the project is to boost the transportation capacity and improve the safety and comfort of public transportation by introducing a light rail transit (LRT) system with 16 stations distributed over 15.7 kilometers of track in and around Colombo. By doing so, the project aims to improve the urban environment through a reduction in air pollution and other traffic pollution and to stimulate socioeconomic activities in the area.

Special Terms for Economic Partnership (STEP) will apply to the Japanese ODA loan for this project, and Japanese technology, including rolling stock and electromechanical equipment for the LRT, will be utilized in the project.