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LBR LBO Summit

ADB gives USD453mn loan for dry zone water projects


June 26, 2015 (LBO) – The Asian Development bank is to grant a loan of 453 million US dollars to help deliver surplus water from the Mahaweli river basin to the dry zone, a statement said.

“Sri Lanka has abundant water resources but they are not distributed evenly across the country,” Lance Gore, ADB Water Resources Specialist said in the statement.

“This assistance will allow the government to complete a decades-old program to transfer water from the country’s largest river to the dry zone,”

“And, will give a real boost to growth, food security, and poverty reduction.”

As well as providing more irrigation water, the investments will deliver clean drinking water to over 350,000 people, resulting in improved community health in areas where chronic kidney diseases are prevalent.

“The loan will finance more than 260 kilometers of new and upgraded canals, reservoirs, and other irrigation infrastructure by 2024,” the ADB statement said.

“Funds will also be used for studies on improving water management and delivery systems.”

ADB’s loan assistance includes 262 million US dollars from its ordinary capital resources and 191 million US dollars from its concessional Asian Development Fund.

Development partners will co finance 114 million US dollars, with counterpart support of 108 million US dollars from the Government of Sri Lanka.

The investment program will be carried out in three tranches, with the first due to start in July 2015, and the full program earmarked for completion by December 2024.

The dry zone region is home to nearly a third of the country’s population, with 70 percent of rural dwellers dependent on agriculture for their livelihood.

However, the statement said that the zone receives less than 1,500 millimeters of rain per year, and droughts are common, which severely constrains agricultural output.

“As a result, average household incomes are around 10 percent lower than in other parts of the country,”

“And this situation is expected to worsen as the population grows and rainfall in the region diminishes further due to climate change.”

ADB says the assistance will help the government to finish the roll out of water delivery and storage infrastructure, which was initiated in the 1970s but not completed as a result of resource constraints and conflict.

In 2014, ADB assistance totaled 22.9 billion US dollars, including co financing of 9.2 billion US dollars.