Lanka gets US $98 mn for road re-building

Colombo: The World Bank is giving 98 million US dollars in additional financing for road re-building in Sri Lanka amid soaring costs of oil based materials, the multilateral lender said.

The money comes to supplement a 100 million dollar road sector assistance project originally approved in 2005 to run with funds from International Development Association (IDA), the World Bank's concessional window.

The IDA credit has a 20-year maturity with a 10-year grace period.

'The additional finance will be mostly used to cover cost-overruns mainly due to the unprecedented oil price increase in the world market that has led to the escalation of prices in oil-based materials,' the World Bank said in a statement.

Sri Lanka's national road network carries over 70 percent of the traffic and is vital for the movement of people and goods.

But the World Bank says uncontrolled roadside development, years of neglect and poor road maintenance have reduced the quality of roads and discouraged long-distance traffic, undermining economic activities outside the capital Colombo.

'An efficient national road system is crucially important to boost economic growth and reduce regional inequality in Sri Lanka,' World Bank statement said.

'This project will help farmers transport their produce to markets on time, increase export competitiveness and accelerate export led growth, and contribute to sustained economic development.'

World Bank says the project has so far improved 150 kilometers of national roads and is on track to reduce highways in poor condition from 52 percent in 2005 to 35 percent by 2010.

'The project has made good overall progress,' says World Bank infrastructure specialist Amali Rajapaksa.

'Importantly, it has played a pivotal role in securing a mechanism for financing the maintenance of national roads which have suffered from a backlog of maintenance for several years.' The project is expected to close in 2011.