ADB, Sri Lanka sign USD210Mn loan for Mahaweli water security investment program

May 18, 2018 (LBO) – The Asian Development Bank (ADB) and the Government of Sri Lanka signed a US 210 million dollar second tranche loan agreement for the Mahaweli Water Security Investment Program, the Finace Ministry siad.

The programme will assist Sri Lanka complete its on going drive to deliver surplus water from the Mahaweli river basin to its dry zone, where scarce supplies undermine agricultural output and household incomes.

“Completion of the Mahaweli Development Program is a key priority of the government and this will maximize the productivity of the Mahaweli River Basin water resources by transferring available water to the northern dry zone of Sri Lanka for irrigation, drinking and commercial purposes,” said Sri Widowati, country director of the Sri Lanka Resident Mission for ADB .

“This availability of water will contribute to accelerating local and national economic growth.”

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

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

As a result, average household incomes are around 10% lower than 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’s Multitranche Financing Facility (MFF) – totaling US 453 million dollar – will finance more than 250 kilometers of new and upgraded canals, reservoirs, and other irrigation infrastructure, in addition to conducting studies on improving water management and delivery systems.

The first tranche loan of US 150 million dollar was made in 2015, and this is the second tranche of the MFF, which will finance the construction of the Kalu Ganga-Moragahakanda transfer canal, a part of the Upper Elahera canal, two new reservoirs namely Mahakithula and Mahakirula, and the Inlet tunnel of the Mahakirula Reservior.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members—48 from the region.