Announcement of IDA Lends Nineteen Million Dollars for an Agricultural Development Project in Sri Lanka on April 25, 1977

-N'orldBank 1818 H Street, N. W., Washington, D.C. 20433, U.S.A. • Telephone: (202) 393-6360 IDA NEWS RELEASE NO. 77/48 APRIL 25, 1977 IDA LENDS $19 MILLION FOR AN AGRICULTURAL DEVELOPMENT PROJECT IN SRI LANKA -------------------------------------------------------------------------- Sri Lanka will implentent a priority agricultural development project -- the Mahaweli Ganga Development Project II -- with the assistance of a credit of $19 mi Ilion from the International Development Association (IDA), an affiliate of the World Bank. Four member Governments -- Canada, The Netherlands, the United Kingdom, and the United States -- are providing an additional credit of $23.2 mi I lion for the $100.5 mi 11 ion project. The Mahaweli Ganga is Sri Lanka's largest river, draining an area of 4,000 square miles. The project covers a contiguous area of 106,000 acres and includes the construction of Irrigation works and land settlement, support services for agriculture, access roads, social services and technical assistance. The Master • Plan for the Mahawel i Development was formulated in 1968 by the Government, with assistance from a United Nations Development Prograrrme, Food and Agriculture Organization of the United Nations (FAO) team and the FAO/World Bank Coopera- tive Program. The Bank and IDA provided $29 million for the first stage of the scheme. This is now almost complete. At fu.11 development in 1986, the second stage of the project wi 11 bring ·major benefits to Sri Lanka's economy. The annual increase in production resulting from the project is estimated at 42,300 tons of foodgrains; 1,100 tons of chi I lies; 3,800 tons of oilseeds and 3,600 tons of ve.getabies. This, in turn, will help Sri Lanka save about $8 million in foreign exchange each year. The project is expected to generate about 12,000 full-time jobs in agriculture. The IDA credit to Sri Lanka is for a term of 50 years, including 10 years' grace. It will be interest free, except for a service charqe of 3/4 of 1% pe-r annum. Canada is extending an interest-free credit of $6 mi 11 ion; The Netherlands is providing $5 million at 2!%; the U.K. is making a grant of $7.2 million; and the U.S. is providing $5 million at 2% interest for 10 years • and 3% thereafter. NOTE: Money figures are expressed in U.S. dollar equivalents. FORM NO. 1121 (5-76) T E C HN I CA L DAT A PROJECT: COUNTRY: TOTAL COST: Mahawel i Ganga Development Project I I Sri Lanka S100.5 million • IDA FINANCING: $19 million credit on standard IDA terms OTHER FINANCING: The Governments of Canada, Th~ Netherlands, the United Kingdom, the United States, and Sri Lanka. IMPLEMENTING ORGANIZATION: Mahawe1i Oevelooment Board J 1 , J awat te Road Colombo, 5 Sri Lanka PROJECT DESCRIPTION: It includes the construction of irriQation and drainage works, and roads for 40,300 acres; clearing of jungle and preparing 40,300 acres for cultivation, as well as settling some 15,300 families on 2! acre plots; provision of equipment and vehicles; production support in the form of farm equipment, market, transport and processing facilities for 71,000 acres; improved agricultural extension services for 106,000 acres; village wells, schools, medical and community faci 1ities; and technical assistance and monitoring. • PROCUREMENT: International competitive bidding under IDA guidelines {with 15% preference margin, or prevailing customs duties ff lo.-1er, for local manufacturers) for equipment and vehicles financed by IDA and The Netherlands. Procurement of equipment and vehicles financed by Canada, UK and US will be under their procurement guidelines. Civil i,,10rks will be small and labor-intensive and will be given on the basis of Joca1 competati·ve bidding. · CONSULTANTS: One adviser on implementation and one on-farm specialist (3 years each) a hydrologist for 12 man-months will be engagad. ECONOMIC RATE OF RETURN: 21% ESTIMATED COMPLETION DATE: 1982 - 0 - •