The Asian Development Bank (ADB) has approved a loan of US$15mn to help the Sri Lankan government prepare a pipeline of projects to develop the country’s road network.
The government’s vision for economic growth and poverty reduction sets ambitious development targets, which will require massive development of road infrastructure and more private sector participation. The technical assistance loan will help the government efficiently manage the early stages of road projects to avoid delays in project implementation.
“The loan will encourage timely pre-construction operations without waiting for funding from external sources and will ensure that the project itself is ready to be financed on time when the investment loan is contracted,” says Hiroaki Yamaguchi, an ADB transport specialist.
Sri Lanka has an extensive network of more than 90,000km of roads, but most were built more than 50 years ago. Road maintenance, rehabilitation, and new construction have not kept abreast with the rapid growth in demand for transport. Traffic levels exceed the design capacity of many roads.
In addition, uncontrolled roadside development has reduced the road network’s capacity. Due to neglect of road maintenance, national, provincial and rural road conditions are poor. All of this raises road-user costs, makes roads unsafe, and lowers the quality and frequency of transport services.
“Upgrading the country’s roads is vital to improving the investment climate in the country and increasing efforts at economic growth and poverty reduction,” Yamaguchi adds.
More than two dozen road projects are planned, including the Colombo-Katunayake Expressway, Alternate Colombo-Kandy Highway, and Katunayake-Padeniya-Anuradhapura Highway.
Under the projects, new expressways are planned, existing roads will be upgraded, highways widened, and bridges added.
The loan will help fund for the government to prepare feasibility studies, environmental and social assessments, resettlement plans, and detailed designs, and bid documents. It will also assist the government in evaluating bids, structuring financial arrangement and concession agreements for privately financed projects, and negotiating projects.
The total cost of the project is estimated at US$20mn. The ADB’s loan accounts for 75% of the project cost and comes from its concessional Asian Development Fund. It carries a 32-year term, including a grace period of eight years. Interest is 1% per year during the grace period and 1.5% per year subsequently. The Sri Lankan government will finance the remaining US$5mn equivalent of the project.
Sri Lanka’s ministry of highways is the coordinating executing agency for the project, which is due for completion on at the end of June 2008.