The ADB will give a 59.78 million loan with a 32-year payback and an eight year grace period from its Asian Development Fund (ADF). An interest rate of 1.0 percent would be charged during the grace period and 1.5 percent thereafter.
It will be supplemented by a 23.3 million US dollar grant and another 2.0 million US dollars from the Netherlands Trust Fund for Water Financing Partnership Facility, information minister Anura Yapa said.
The cabinet of ministers had given the nod to sign the loan agreement, he said.
The Sri Lanka government will contribute 28.3 million US dollars for the project valued at 113.33 million US dollars.