Sri Lanka has signed an agreement with India to upgrade tracks in a key railway segment connecting the north and south at a cost of $ 91.26 million.
This is the first time in 100 years that the 130 km-long-tracks, running from Maho town in the North-Western Province to Omanthai in the Northern Province, are being upgraded. The initiative seeks to double the speed potential of the track from the current 60 km/hour to 120 km/hour, reduce maintenance costs and potentially improve travel comfort of passengers, according to a press release from the Indian High Commission here.
The contract agreement for concessional financing was signed in Colombo on July 18 between the Government of Sri Lanka and IRCON International Ltd., represented respectively by Arjuna Ranatunga, Minister of Transport and Civil Aviation, and Sunil Kumar Choudhury, Chairman & Managing Director, IRCON.
The terms of the agreement, as in earlier Lines of Credit extended by India to Sri Lanka, include an interest rate of 1.75 %, with a grant element of 31.37 %, and a repayment period of 20 years, with a five-year moratorium, according to official sources.
The agreement comes as part of India’s ongoing support to further develop Sri Lankan railways. New Delhi has so far committed Lines of Credit worth $1.3 billion for development of the sector in the island, including restoration of an arterial railway line that was destroyed during the civil war, and the island’s southern railway line that was hit by the 2004 tsunami.