Saudi Arabia will fund Saudi Riyal 172 million (Rs.5,332 million) for the construction of a dam in Sri Lanka, which will be the highest grant offered to the island since 1981.

The agreement will be signed in Colombo. “This is the seventh financial facility offered by the Saudi Fund for Development (SFD) for infrastructure development in the country,” SFD Project Director Abdullah Al Shedokhi told the Daily News.

The project, he said, dubbed as Kaluganga project is to be implemented by the Mahaweli Authority with co-funding by the Kuwait Fund and the Sri Lankan Government.

The $ 113 million project will be shared by SFD-$ 46 million, Kuwait Fund-$ 37 million and Sri Lanka Government-$ 30 million.

The water from Kaluganga will be diverted to areas in Morgahakande and to cultivable areas in the North-East. In 2008, SFD provided Saudi Riyal 75 million to construct the Epilepsy Hospital in Colombo and Rs.11 million to provide an extension to the Neuro-Trauma Centre at the Colombo General Hospital.

Earlier, Saudi Arabia provided a concessional loan of Saudi Riyal 45 million to construct the Neuro-Trauma Centre at the Colombo General Hospital in 2002 and the construction of the building was already completed. The SFD has provided Sri Lanka with project loans on three previous occasions.

It had offered Saudi Riyal 99.9 million for the second stage of the Water Supply and Sewage project and gave SR 48.1 million for the Mahaweli Ganga Development Project System B in 1981. Sri Lanka obtained SR 85 million for the Mahaweli Ganga Development Project System B Left Bank in 1984.

In 1985, under the Mahaweli Development Project, Sri Lanka built a model town in Polonnaruwa where a large market was named as ‘Riyadh Market’.

SFD had also granted SR 40 million for the construction of Kinniya bridge and a road widening project, Daily news reported.