$150 Million Loan to Help Improve Sri Lanka's Highways

News Release | 16 December 2005

MANILA, PHILIPPINES - An ADB loan of US$150 million will help upgrade about 270 km of national highways in Sri Lanka, and in turn open up further opportunities for economic development.

While Sri Lanka's road density is higher than that of many developing countries, the road network standards and conditions are inadequate to meet the rapidly growing freight and passenger traffic.

The project is the second in a series of ADB operations in Sri Lanka's road sector. ADB has been helping establish a policy and institutional framework to improve the overall performance of the country's road sector since 2002.

The project roads are part of the Government's investment plan for 2005-2010, and include Puttalam-Anuradhapura, as well as hilly roads and south highway links.

The project includes improving or replacing bridges, drainage, and culverts, and providing weight stations when necessary. The project will also finance the acquisition of land for roads linking to Colombo.

Most of the national highway network is still single- or two-lane, more than half of the network has poor and bad surface condition, and many portions are seriously congested.

"This situation limits the roads' contribution to national development and economic growth. To cope with the constraints, the existing road infrastructure must be improved and upgraded," says Sri Widowati, an ADB Senior Project Specialist.

The project will further assist reforms to improve the Ministry of Highways and Road Development Authority's (RDA) strategic management of the road sector. It will review policies and regulatory frameworks, improve human resource development and project management, and finance the first phase of the construction of a headquarters for the RDA.

A four-year performance-based maintenance program will also be piloted in four to six areas, to be implemented through private sector contractors formed from the current casual labor available in the respective areas.

A $400,000 technical assistance grant accompanies the loan to help boost the operations of the newly established Environmental and Social Division of the RDA.

ADB's loan comes from its ordinary capital resources. It carries a 25-year term, including a 5-year grace period. Interest will be determined in accordance with ADB's LIBOR-based lending facility.

The Government is contributing $58 million toward the project's total estimated cost of $208 million. The RDA is the executing agency for the project, which is due for completion in 2010.