The Cabinet of Ministers has approved entering into an agreement with the OPEC Fund for International Development (OFID) to obtain a $ 60 million loan facility for Phase II of the Mahaweli Water Security Investment Program.
Following negotiations, the OPEC Fund agreed to provide the facility in two components of $ 48 million and $ 12 million. The Cabinet had earlier approved negotiations for the loan on 20 July 2026, as part of the proposed co-financing arrangement.
The Phase II of the program is aimed at achieving the Government’s long-term objectives of enhancing food security, strengthening water resources management, improving resilience to climate change and reducing poverty in dry zone areas.
‘The estimated total cost is $ 536.5 million, with funding to be raised through a multi-development partnership approach,’ Cabinet Spokesman and Minister Dr. Nalinda Jayatissa said at the weekly post-Cabinet meeting media briefing yesterday.
The Asian Development Bank has already agreed to provide $ 200 million.
He said under this phase, the remaining section of the main tunnel will be completed, including excavation of around 7 kilometers and related finishing works. Open and covered canals, waterways and small tunnel sections totaling about 68 kilometers will also be constructed, along with an 8-kilometer section of the Allapokana Irrigation Project canal.
The phase also includes the development of commercial agricultural infrastructure, comprising about 13 pressure distribution networks to reliably and efficiently supply irrigation water to high-value crops and field crops.
In addition, he said the agricultural production systems will be transformed through the introduction of climate-resilient value chains and expanded access to financial services and agricultural project services for farmers.
The proposal to this effect was submitted by President Anura Kumara Dissanayake in his capacity as the Finance, Planning and Economic Development Minister.