ADB approves $200 Million loan to boost Sri Lanka’s Mahaweli Development Program

The Asian Development Bank (ADB) has approved a $200 million loan to support Sri Lanka’s Mahaweli Development Program, the country’s largest multiuse water resources initiative.

The program aims to transfer excess water from the Mahaweli River to the drier northern and northwestern regions of Sri Lanka.

The Mahaweli Water Security Investment Program Stage 2 Project is expected to directly benefit more than 35,600 farming households in the North Central Province by strengthening agricultural resilience and enhancing food security.

ADB is leading the joint cofinancing effort for the project, which will also receive $60 million from the OPEC Fund for International Development and $42 million from the International Fund for Agricultural Development.

“While Sri Lanka has reduced food insecurity, it remains a development challenge for the country,” said ADB Country Director for Sri Lanka, Takafumi Kadono. “Higher agricultural productivity and crop diversification are necessary to achieve food security, and adequate water resources and disaster-resilient irrigation systems are key.”

The project will complete the North Central Province Canal (NCPC) irrigation infrastructure, which is expected to irrigate about 14,912 hectares of paddy fields and provide reliable water for commercial agriculture. This includes constructing tunnels, open and covered canals, and establishing a supervisory control and data acquisition system to improve NCPC operations.

Once completed, the NCPC will connect the Moragahakanda Reservoir to the reservoirs of Huruluwewa, Manankattiya, Eruwewa, and Mahakanadarawa.

The commercial agriculture development (CAD) component will construct 13 pressurized pipe distribution networks to provide efficient irrigation for high-value crops across 5,039 hectares of upland fields. Farmers will benefit from on-farm drip irrigation and “water on demand” systems, along with support for crop diversification, access to financial services, and training in modern farming practices.

The project aims to promote perennial crops with export potential, such as mango, papaya, guava, and passion fruit in upland areas, while supporting seasonal crops like mung bean, chili, maize, groundnut, and vegetables in lowland paddy areas, particularly during the Yala cultivation season (April to September). It will also help farmer organizations operate as business entities, adopting market-driven production systems with tailored financial and extension support.

The project comes in the wake of Cyclone Ditwah in late November, which caused the country’s worst flood in two decades and damaged over 160,000 hectares of paddy fields, nearly 96,000 hectares of other crops, and 13,500 hectares of vegetables.

ADB, founded in 1966 and owned by 69 members including 50 from Asia and the Pacific, is a leading multilateral development bank supporting inclusive, resilient, and sustainable growth in the region.