India and Sri Lanka on Wednesday signed a Line of Credit agreement for $67.4 million to fund the second phase of upgradation of the Southern Railway Line from Colombo to Matara.
A statement by the Indian mission here said that the agreement was signed by P. B. Jayasundera, Secretary, Ministry of Finance and Planning, and Prabhakar Dalal, Executive Director, Export-Import Bank of India, in the presence of Ashok K. Kantha, the High Commissioner of India in Colombo.
The Government of India, through the Export-Import Bank of India, had earlier provided $100 million Line of Credit under an agreement signed in July 2008.
The implementation of the first phase of the upgradation of the Southern Railway Line is now ongoing. The upgradation project includes supply of materials for rail track rehabilitation from Colombo to Matara and execution of work for rail track rehabilitation from Kalutara to Matara, which is being implemented by IRCON (I) Ltd.
In addition, the Line of Credit is being used for supply of 20 sets of diesel multiple units (DMUs), three units of locomotives, spare parts for the existing M8 class locomotives, supply of plant and machinery for maintenance of existing DMUs and construction of maintenance sheds at Aluthgama, Galle and Colombo by RITES India Ltd. The upgradation project would allow the trains to travel on the Colombo-Matara sector at speeds up to 100 kmph.
It will increase the average operating speed from 40 kmph to 80 kmph, allowing a passenger express train to cover the Colombo-Galle distance within 2 hours.
The supply of DMUs and locomotives would also increase the train capacity and the frequency of trains, alleviating the existing constraints in this regard on the Colombo-Matara sector.
Separately China, through its funding arm the Exim Bank, has concluded with Sri Lanka a concessional funding arrangement to construct the island's second airport in Mattala at a cost of $190 million while also pledging concessional financing of $100 million to augment the capacity of the Sri Lankan railway.
An official statement here said that the two concessional loan agreements were signed during a three-day visit by Mr. Jayasundera and a delegation from the External Resources Department and Attorney General's Department to Beijing from March 3 to 5.
It said that the Finance Secretary had productive discussions with Exim Bank officers in fast-tracking many infrastructure development projects being evaluated by the bank for future funding, particularly in the Northern and Eastern Provinces of Sri Lanka.
Emphasis was laid on speeding up the evaluation process for the construction of the A9 highway, the statement said.
The economic relations between Sri Lanka and China in recent times have witnessed a sharp rise.