Kuwait soft loan to bridge Sri Lanka water project funding shortfall

ECONOMYNEXT – The Kuwait Fund for Arab Economic Development (KFAD) has provided an additional soft loan of 5 million Kuwait Dinars (about $16.5 million) for Sri Lanka’s Kalu Ganga multi-purpose development project, which is facing a funding shortfall.

The loan for the project in the Central Province of Sri Lanka, which provides irrigation water and hydropower, is at an annual interest rate of 1.5 percent, with a repayment period of 22 years, a Ministry of Finance statement said.

The Kuwait Fund for Arab Economic Development had already provided 10 million Kuwait Dinars in 2009 for the  project, which aims to increase existing water supplies to about 85,500 hectares of drought-prone irrigation areas in the northern and central parts of Sri Lanka.

The Kalu Ganga Development Project is currently being implemented by the Ministry of Mahaweli Development and Environment with the financial assistance of Saudi Fund for Development (SFD), KFAD and OPEC Fund for International Development (OFID).

The proposed Kalu Ganga Reservoir will have a capacity of 265 million cubic meters (MCM) of water and will divert 100 MCM annually to Moragahakanda Reservoir.

“The financial assistance received from the lenders is not adequate to complete the project, as the cost of the project has increased due to various reasons including unforeseen geological conditions in the foundations and necessary design revisions,” the statement said.

The OFID has also already agreed to provide an additional loan of $18 million.
(COLOMBO, April 11, 2017)

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