Helping to Improve Urban Infrastructure in Sri Lanka Towns

News Release | 5 December 2005

MANILA, PHILIPPINES - ADB has approved a US$50 million loan to help improve urban infrastructure facilities and basic urban services in at least 68 towns in Sri Lanka.

More than $42 million will be made available to local authorities as part grant and part loan through the Local Loans and Development Fund (LLDF). The idea is to have the local authorities identify and design projects to improve their basic infrastructure and services delivery, and then apply for finance from LLDF.

Qualified projects cover community water supply, local authority roads, drainage and community sewerage, solid waste management, and basic health clinics, public libraries, and recreational parks.

"The project represents a shift in ADB's approach from supply-driven central Government-led investment to a more decentralized approach of providing local authorities with the decision-making role," says Tomoo Ueda, an ADB Urban Development and Planning Specialist.

"In the interest of capacity building through learning by doing and promoting sustainable development, local authorities with guidance from provincial councils should take the lead role to plan the improvement of their basic infrastructure and living conditions."

A huge influx of mostly poor migrants into the country's cities and towns has overwhelmed infrastructure systems originally designed for much smaller populations. Deteriorated roads, inadequate supplies of drinking water, and poor drainage and domestic sanitation are some of the problems present in many of Sri Lanka's towns.

More than others, the urban poor suffer from these conditions, resulting in illness caused by water- and vector-borne disease and reduced productivity.

The project will provide infrastructure development planning and financial management support to local authorities and project development assistance support to provincial councils. It will also help strengthen LLDF's performance, including its fund management.

About 4 million people from 68 towns outside Colombo are expected to benefit from improved living conditions as a result of the project, leading to better health and productivity.

ADB's loan comes from its concessional Asian Development Fund. It carries a 32-year term, including a grace period of 8 years. Interest rate is set at 1% per annum during the grace period and 1.5% per annum thereafter.

The Government will contribute $12 million equivalent towards the project's estimated total cost of $66.7 million, and the local authorities will contribute $4.7 million equivalent.

The Ministry of Provincial Councils and Local Government is the executing agency for the project, which is due for completion in April 2012.