$90M Project to Address Water, Sanitation Issues in Sri Lanka's Conflict-Affected Areas

News Release | 1 December 2010

MANILA, PHILIPPINES - The Asian Development Bank (ADB) will provide $90 million in loans to help Sri Lanka restore water supply and sanitation infrastructure to the conflict-affected Northern Province.

ADB's Board of Directors approved the loans and technical assistance for the Jaffna and Kilinochchi Water Supply and Sanitation Project. The funds will help rehabilitate and expand water and sanitation infrastructure in target areas of the Jaffna Peninsula.

"The government recognizes the project as a key part of its reconstruction program for the Northern Province, and the impact will be improved health and human development in urban areas of the Jaffna Peninsula for both current residents and returning internally displaced people," said Ricardo Barba, Safeguards Specialist in ADB's South Asia Department.

The end in 2009 of the 30-year civil conflict has seen a gradual return to normal in the Jaffna Peninsula as displaced residents move back to their homes, and as security and access improves. However, much of the key infrastructure was damaged in the conflict or has deteriorated as a result of neglect. Over extraction of groundwater, aquifers under threat from contamination, and the absence of effective water resources management also present obstacles to development.

"Providing these basic needs will complement government efforts to achieve the Millennium Development Goals," said Mr. Barba.

The project will rehabilitate and improve reservoir headworks, and construct a water treatment and distribution system serving the Jaffna and Kilinochchi Districts. The new water distribution system will provide access to household connections and metered community water facilities. On the sanitation side, funds will be used to build a sewage collection and treatment system for the Jaffna Municipality; and construct low-cost household and communal latrines in poor communities.

Support will be given to the Jaffna Water Resources Management Committee to carry out a study and to draw up a comprehensive, integrated water resources management plan. Assistance will also be given to other resource bodies and local authorities, to develop groundwater quality and quantity monitoring and management systems, and to conduct public conservation, environmental protection and hygiene awareness campaigns.

A technical assistance grant of $600,000 from ADB's concessional Technical Assistance Special Fund will be used for a needs assessment and to establish training courses on service delivery for relevant agencies and local authorities. The Government of Sri Lanka will finance $65,000 equivalent for a total cost of $665,000.

The loan finance includes a 25-year, $20 million loan from ADB's ordinary capital resources with a 6-year grace period, and an annual interest rate set in accordance with ADB's LIBOR-based lending facility. A second loan of $70 million equivalent from ADB's concessional Asian Development Fund has a 32-year term, including a grace period of 8-years with an annual interest charge of 1%, rising to 1.5% for the balance. Agence Française de Développement is expected to provide $40 million equivalent and the Government of Sri Lanka will provide over $34 million, for a total investment cost of $164.04 million.

The Ministry of Water Supply and Drainage and the Ministry of Local Government and Provincial Council are the executing agencies for the project, which is due for completion by February 2017.