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Korea Exim bank will finance this project with a very concessional EDCF loan of 0.15 percent interest rate and 40 year repayment period including 10 year grace period.
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The project executing agency will be the Ministry of Highways and Higher Education of Sri Lanka, while the project implementing unit will be the Road Development Authority.
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The main objective of the project is to ease the traffic congestion at centre of Kandy by constructing by-pass tunnels for many vehicles wanting to go to the West or the East of Kandy without entering Kandy lake road. After established, the tunnel is expected to reduce the passing time from Suduhumpola to Tennekumbura from 2 hours to less than 30 minutes at rush hours. Therefore, the Kandy tunnel will save colossal waste of money due to extra fuel combustion and increased air pollution near the Sri Dalada Maligawa (Temple of the Sacred Tooth Relic). In addition, the tunnel may boost the economy of Kandy by providing a short connection between the Kandy industrial zone and the road (A1) to Colombo where container terminals for export are located. Korean government’s decision to finance 200 million dollars for this project comes at a significant time as this year marks the 40th anniversary of diplomatic relations between Sri Lanka and the Republic of Korea.