Sri Lanka in new push on agriculture

Nov 30, 2007 (LBO) – Sri Lanka is getting 360 million dollars in concessionary aid from Iran to build a multipurpose irrigation project that will generate 100 MegaWatts of electricity and divert water to irrigate the south of the country, officials said. The Uma Oya project with cost a total of 450 million dollars, Treasury Secretary P B Jayasundera said Friday.

The US dollar loan from Iran will come with a 5-year grace period and a 10-year pay back.

Jayasundera said the loan came with interest rates of between 3.00-3.50 percent.

In addition to generating power the Uma Oya project will take water to dry areas in the southern tip of the island through a 23-kilometer tunnel.

The government was also looking to build another reservoir in Moragahakanda which will take water to the east and north central areas of the country and villages bordering Tamil Tiger controlled areas, Jayasundera said.

Jayasundera said the government had given a new impetus to agriculture from removing subsidies on imported products which were politically motivated.

He said the complete removal of the flour subsidy which at one time had cost 0.5 percent of gross domestic product had helped push up the price of domestically produced rice.

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