The Asian Development Bank (ADB) is providing a $70 million road rehabilitation loan to support Sri Lanka’s drive to revitalize Eastern and Northern provinces.

The loan, from ADB’s concessional Asian Development Fund, will fund the upgrade of 370 kilometers of roads in the two provinces, as well as rebuild and replace bridges.

A technical assistance grant of $800,000 will help boost the capacity of provincial agencies managing and maintaining roads, supporting the central government’s move to devolve these responsibilities to the local level.

Along with reducing travel times, cutting transport costs, and providing new economic opportunities for remote communities, the project will also help revive tourism in an area with beaches and heritage cities that have been extremely popular with foreign visitors in the past.

Given the sensitivity of working in areas that have been consumed by conflict and ethnic tensions in the past, the project has been prepared with the involvement of a broad range of stakeholders and beneficiaries

Since 1980, ADB has extended 12 loans totaling $591 million for the road sector in Sri Lanka, and the project is part of ongoing collaboration with World Bank and Japan International Cooperation Agency to upgrade and develop the country’s roads.

ADB’s 32-year loan, which makes up almost 90% of the total project cost of $78 million, has an 8-year grace period with an annual interest charge of 1%, rising to 1.5% for the balance. The government is financing project taxes and duties of $8 million. The project is due for completion in December 2013.