The Kuwait Fund for Arab Economic Development (KFAED) has signed an additional loan agreement of $18m (KWD5.5m) with Sri Lanka to further assist in the Kalu Ganga development project.
The earmarked sum will be the second KFAED loan to Sri Lanka. The fund has already loaned $32.7m (KWD10m) for the same project.
The total cost of the project, as revised and updated recently, is estimated at $207.5m (LKR31.6bn), of which approximately $118.2m (LKR18bn) are in foreign exchange, representing approximately 57% of the total cost of the project.
The KFAED loans will cover approximately 18% of the total cost of the project, or about 32% of the foreign exchange.
The Saudi Fund will provide additional financing for development along with the OPEC Fund for International Development.
The Sri Lankan government will cover the remaining costs, a press statement said.
The supplementary KFAED loan agreement will extend over a term of 22 years, including a grace period of two years, and is to be amortised in 40 semi-annual instalments, the first of which will be due after the elapse of a grace period of two years.
The loan bears an interest rate at 1.5% per annum, in addition to 0.5% per annum for meeting administrative costs and other expenses incurred in the implementation of the loan agreement.