World Bank provides US$125 mn loan for low-cost road network

Sri Lanka is joining other countries in moving from a traditional approach to road infrastructure and maintenance which pays the contractor based on progress, to a new approach based on contractor performance. 

This approach will create incentives for better quality and timely interventions which will provide the public with better maintained roads at a lower cost to the government. Financed through a US$125 million loan from the World Bank, the new Transport Connectivity and Asset Management Project was signed yesterday by Idah Pswarayi-Riddihough, World Bank Country Director for Sri Lanka and the Maldives, and R.H.S. Samaratunga, Secretary to the Treasury, Ministry of Finance.  “Maximizing quality and minimizing costs of the island-wide road network will no doubt become a model project of the Road Development Authority,” said Pswarayi-Riddihough. “Better and safer roads will benefit all Sri Lankans and contribute to the country’s prosperity and poverty reduction.” 

A dense network makes roads the preferred mode of transportation in Sri Lanka, carrying 95 percent of passenger traffic and 98 percent of freight. Building on the lessons from the World Bank-supported Roads Sector Assistance Project, the new project will help strengthen the RDA by focusing on the institutional and system changes that can transform the authority from a provider of infrastructure to a service provider.

The contracting approach to be piloted in the project aims to improve construction quality, minimize delays and costs, and address the issue of poor-performing contractors. The project will be implemented on the section between Ja-Ela and Chilaw on National Road A003. The contractor will carry out the design, upgrading, rehabilitation, and maintenance under a long-term contract. 

“The Road Development Authority will monitor the contractor and make payment based on the delivery of safe roads free of pot holes, water logging, with shoulders, drainage, and lighting that are well maintained and comfortable for the road users,” said Amali Rajapaksa, World Bank Senior Infrastructure Specialist and Task Team Leader. “These types of contracts will benefit the Government, contractors and the general public by saving costs and serving as a model that could be adopted by many other sectors in the future.”

The loan for this project is provided by the International Development Association (IDA), the World Bank’s grant and low-interest arm, with a maturity of 25 years that includes a grace period of five years. The project also supports a program financed by the Asian Development Bank (ADB). The RDA is the lead implementing agency.