Sri Lankan government clears Rs. 47.18 billion revision for lower Malwathu Oya project
Daily FT: The Cabinet of Ministers has approved a near-doubling of the cost estimate for the Lower Malwathu Oya Multipurpose Development Project to Rs. 47.18 billion and extended its completion deadline to 31 December 2030, underscoring both the scale of the country’s development ambitions in the Northern Province and the fiscal realities reshaping long-delayed infrastructure projects.
Originally launched in 2016, the project was designed to address chronic water scarcity in the Lower Malwathu Oya Valley, a constraint that has long undermined rural livelihoods and agricultural productivity.
Cabinet Spokesman and Minister Dr. Nalinda Jayatissa announcing the decision at the weekly post-Cabinet meeting media briefing has said beyond irrigation, the initiative aims to open up a new development zone in the Thanthirimale area, raise cultivation intensity across more than 30,000 acres of paddy land fed by Yodha Wewa and Akithamurruppu Wewa in the Mannar District, generate hydropower and improve access to drinking water.
Cabinet approval for the project was initially granted in July 2019 at an estimated cost of Rs. 22.9 billion. Construction commenced under the Department of Irrigation but was subsequently halted as the COVID-19 pandemic and the ensuing economic crisis disrupted public investment and contractor capacity. By 2022, work on the project had come to a standstill.
The revival has come through the Government’s ‘Re-Strategisation and Acceleration of Large-Scale Development Projects’ framework, under which construction has now resumed. “The revised estimate of Rs. 47.18 billion reflects updated assessments by the Technical Evaluation Committee, factoring in cost escalations, design refinements and the impact of prolonged delays,” he added.
The Cabinet decision also shifts implementation fully to local funding, a move that aligns with broader efforts to recalibrate capital spending amid constrained access to external financing. While the higher price tag highlights the fiscal cost of interruptions and macroeconomic shocks, policymakers view the project as a long-term investment in water security, food production and regional development, particularly in areas still lagging national averages.
“With an extended timeline to 2030, the Lower Malwathu Oya project now re-enters the national development pipeline at a moment when the Government is seeking to balance fiscal consolidation with targeted infrastructure spending that delivers measurable economic and social returns,” he said.
OSL take:
While Sri Lanka’s development programme has presented many business/investment opportunities, the recent destruction caused by Cyclone Ditwah has added to the list of existing development projects with special focus on natural disaster mitigation, especially in controlling flood situations. There have been funding pledges for key development projects in the country including those related to disaster mitigation. There are many business/investment opportunities in Sri Lanka’s development programme that range from providing technological and technical expertise to the construction of the projects. With Sri Lanka’s economy on an expansion path and the country being in line to becoming a regional hub, the need for Sri Lanka to meet the increasing demand while being on par with global standards shows the attention being paid to the development projects. Given all these factors, foreign businesses/investors could explore the growing business/investment opportunities in Sri Lanka’s development programme as well as the emerging opportunities in all key economic sectors in the country. Foreign businesses could also look at engaging with Sri Lanka through partnerships or joint ventures with local businesses.
| Article Code : | VBS/AT/20251219/Z_3 |