The FINANCIAL -- The Asian Development Bank (ADB) is providing Sri Lanka with financial assistance to rehabilitate roads in the conflict-affected northern region, which will help spur inclusive growth and new economic opportunities in one of the poorest regions in the country.

The ADB Board of Directors today approved loans of $154.4 million from ADB's ordinary capital resources and concessionary Asian Development Fund for the Northern Road Connectivity Project. It will also provide a technical assistance grant of $500,000 to support agencies that manage and maintain the roads.

"During nearly three decades of civil conflict, Northern Province was one of the worst affected regions, with its road network falling into total disrepair as a result of damage and neglect. People were unable to get goods to market, or access basic social services, and long travel times have seen the region become increasingly isolated from the south of the country," ADB says.

The project will carry out civil works on 140 kilometers of provincial roads in Mannar and Vavuniya districts, including those linking settlements to markets, as well as major feeder roads connecting towns and villages. Another 170 kilometers of national roads will be rehabilitated, helping link the north to city centers in the south. The improved surfacing and widening will help cut travel time and costs, revitalizing travel between the north and south.

“The project is targeted to meet one of the most urgent needs of the conflict-affected population in the north – connectivity and mobility. It will facilitate access to essential social services, help resume livelihood activities, and revitalize transport of goods and peoples between the country's northern and southern regions,” said Dong-Kyu Lee, Transport Specialist in ADB’s South Asia Department.

Of the two loans, ADB will provide $130 million from its ordinary capital resources with a 25-year term, five-year grace period, and interest determined in accordance with its LIBOR-based lending facility. The Asian Development Fund loan of $24.4 million equivalent has a 32-year term, including a grace period of eight years, with interest charged at 1% per annum during the grace period and 1.5% for the rest of the term. The government will provide assistance of $18.6 million, for a total project cost of $173 million.

The grant of $500,000 from ADB’s Technical Assistance Special Fund will be used to strengthen the capacity of the Northern Provincial Council-Northern Provincial Road Development Department to manage and maintain the road network. Additional technical assistance support of $60,000 equivalent will come from the two provincial agencies.

The Ministry of Highways for the national roads component and the Ministry of Local Government and Provincial Councils for the provincial roads component, respectively, are the executing agencies, for the project which is due for completion around June 2015.

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