Sri Lanka Cabinet approves $60mn OPEC Fund loan for Mahaweli project Phase 2

EconomyNext and Newswire report that Sri Lanka’s Cabinet approved a proposal to enter into an agreement for a $60 million loan from the OPEC Fund for International Development, also known as OFID, for Phase 2 of the Mahaweli Water Security Investment Programme. Newswire identifies President Anura Kumara Dissanayake as the proposal’s submitter, acting as Minister of Finance, Planning and Economic Development.

EconomyNext and Newswire report that the fund is to provide the loan in two components, worth $48 million and $12 million. Both outlets say the Cabinet had previously approved negotiations on July 20, 2026, and that the phase is estimated to cost $536.5 million. Newswire says the Asian Development Bank has already agreed to provide $200 million, with other financing expected through multiple development partners.

EconomyNext and Newswire report that planned works include completing the remaining section of the main tunnel and building about 68 kilometres of canals and waterways. Both outlets also describe an eight-kilometre canal section for the Ellapothana Irrigation Project and about 13 pressurised distribution networks to supply irrigation for high-value and field crops.

EconomyNext and Newswire say the phase is intended to strengthen food security in dry-zone areas, water-resource management and climate resilience, while reducing poverty. EconomyNext reports that Minister Nalinda Jayatissa described these as government objectives; both outlets also report plans to support climate-resilient farming, and Newswire says the programme is intended to improve farmers’ access to financial services.