Sri Lanka’s economic crisis exposed a critical weakness that continues to threaten the country’s stability: our heavy dependence on imported fuel.
Fuel quotas, import restrictions, and price increases may provide temporary relief during periods of shortage, but as long as millions of Sri Lankans rely on fuel-powered vehicles for their daily travel, the country will remain vulnerable to fuel shortages, foreign exchange pressures, and global energy shocks.
Sri Lanka spends billions of dollars each year importing fuel. In 2025 alone, fuel imports cost the country approximately $ 3.8 billon. At the same time, around 93% of land transport in Sri Lanka depends on roads, making the economy heavily reliant on petroleum-based transport.
Yet one of the most promising long-term solutions was already planned.
The Colombo Light Rail Transit (LRT) project was designed to make public transport efficient in the Western Province while reducing dependence on imported fuel. Backed by highly concessional Japanese financing and supported by years of planning and technical studies, the project had the potential to address several of Sri Lanka’s most pressing challenges. However, despite its strategic value, the project was cancelled before construction began.
The LRT should not be viewed simply as a transport project. It should be recognised as a strategic investment in energy security, economic resilience, and sustainable development.
The fuel crisis is also a transport crisis
A significant share of Sri Lanka’s fuel consumption comes from the transport sector. Every day, thousands of cars, motorcycles, vans, and buses enter Colombo, creating severe congestion and consuming large quantities of imported fuel.
Traffic congestion does more than inconvenience commuters. It wastes fuel, reduces productivity, increases pollution, and places a growing burden on the economy. Vehicles spend countless hours stuck in traffic, burning fuel while generating little economic value.
The events of 2022 demonstrated the risks of this dependence. Fuel shortages disrupted businesses, affected healthcare services, interrupted livelihoods, and created uncertainty across the country.
If Sri Lanka wants to reduce its vulnerability to fuel crises, it must provide people with a reliable alternative to private vehicle use.
Why the LRT matters
The proposed system would have operated primarily on electricity rather than imported petroleum products. This is where the LRT becomes more than a transport project.
Every commuter who shifts from a private vehicle or fuel-powered bus to an electric rail system reduces the country’s demand for imported fuel. When that shift occurs across thousands of daily journeys, the national impact becomes substantial.
The benefits are clear:
Lower fuel imports
Reduced pressure on foreign exchange reserves
Less traffic congestion
Higher productivity through shorter travel times
Lower carbon emissions
Greater protection against future fuel supply disruptions
In short, the LRT offers a practical solution to several national challenges through a single long-term investment.
The LRT was never just one rail line
Public discussion about the LRT often focuses on the proposed Malabe-Fort line. However, this was only the first stage of a much larger plan.
The project was intended to become the backbone of a modern public transport network across the Colombo Metropolitan Region. Future phases were expected to connect major residential areas, business districts, educational institutions, and transport hubs throughout the Western Province.
This broader vision is important because the Western Province contributes more than 40% of Sri Lanka’s GDP and serves as the country’s primary economic centre. Improving mobility within the region is therefore not simply a transport objective-it is an economic priority.
The cancellation of the LRT halted more than a single rail line. It halted the foundation of a long-term transport strategy designed to support the future growth and competitiveness of Sri Lanka’s most economically important region.
For example, studies indicated that the journey between Malabe and Colombo Fort could be completed in approximately 30 minutes, with trains operating at frequent intervals during peak periods. This would have provided commuters with a practical and reliable alternative to road travel.
A costly missed opportunity
The original project was supported by one of the most favourable financing arrangements ever offered for a major transport infrastructure project in Sri Lanka. Reports indicate that the Japanese loan carried an interest rate of approximately 0.1%, with a repayment period of 40 years and a grace period of 12 years.
Such financing is exceptionally rare. By cancelling the project, Sri Lanka not only lost the opportunity to build a modern public transport system but also incurred significant costs related to project termination and abandoned prep work. More importantly, the country lost valuable time. Years later, Sri Lanka continues to face many of the same challenges that the LRT was intended to address.
How the Government can move forward
Reviving the LRT does not mean starting from scratch. Much of the groundwork has already been completed, including feasibility studies, environmental assessments, route planning, and technical designs. The foundation already exists. The Government should consider the following steps:
Re-engage Japan and JICA: Japan has long been one of Sri Lanka’s most reliable development partners. Reopening discussions with JICA and the Japanese Government could help rebuild confidence and explore opportunities to revive the project and its financing arrangements.
Recognise the LRT as an energy security investment: The LRT should not be viewed solely as a transport project. It is also an investment in reducing fuel imports, strengthening energy security, and improving economic resilience. Reducing dependence on imported fuel is just as important as increasing export earnings.
Build an integrated public transport system: The success of the LRT depends on how well it connects with other forms of transport. Bus services, existing railway networks, and park-and-ride facilities should be integrated into a single system that makes public transport convenient and accessible.
Align the project with renewable energy goals: As Sri Lanka expands solar, wind, and other renewable energy sources, an electric rail system can increasingly operate using locally generated energy. This would further reduce dependence on imported fuel while strengthening national energy security.
Looking beyond the next crisis
The question is not whether Sri Lanka will face future fuel and energy challenges. Global energy markets remain uncertain, and fuel prices will continue to fluctuate.
The real question is whether Sri Lanka will continue relying on a transport system that increases fuel dependence, or invest in infrastructure that reduces it. The LRT offers an opportunity to address multiple national challenges at once: fuel dependence, traffic congestion, urban pollution, productivity losses, and long-term economic competitiveness. Reviving the project would demonstrate a commitment to long-term planning rather than short-term crisis management. Sri Lanka spends billions of dollars importing fuel every year, yet one of the country’s most important fuel-saving infrastructure projects remains unfinished.
The fuel crisis showed us the cost of dependence. The LRT offers a path toward resilience.
Sri Lanka should not wait for the next fuel crisis to recognise its value.