The overall aim of the 'Metro Colombo Urban Development Project' under taken with World Bank funding is to improve planning and delivery of priority infrastructure and local services in the capital metropolitan region.
The project will start in the latter part of 2011 and be completed in three years.
"This project will reduce the occurrence of floods affecting the people and assets in the region," the statement said.
Medium and small scale infrastructure projects benefiting the people in the region will also be done under the project which will also enhance the institutional capacity of local authorities in the region.
The government of Sri Lanka will bear the initial cost for the establishment of a project management unit costing 50 million rupees.