ADB lends US $ 210mn to end water scarcity in Sri Lanka’s dry zone

From left: Sri Widowati, ADB Country Director of the Sri Lanka Resident Mission and R.H.S. Samarathunga, Secretary to the Treasury, Ministry of Finance and Mass Media

The Asian Development Bank (ADB) and the Sri Lankan government signed a US $210 million second tranche loan agreement for the Mahaweli Water Security Investment Programme to assist Sri Lanka complete its ongoing 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 Programme 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, ADB Country Director of the Sri Lanka Resident Mission.

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

Widowati signed the loan agreement on behalf of ADB while R.H.S. Samarathunga, Secretary to the Treasury, Ministry of Finance and Mass Media, signed for the Government of Sri Lanka.  

The dry zone 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 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 percent 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 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 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.