The Sri Lanka government is putting in 35 million dollars as its contribution to the project. The 135 million dollar project covers the Colombo municipal area as well as suburbs to the north and south of the city.
Defunct wastewater treatment plants at the two outlets to the sea will be replaced with modern treatment plants under the project.
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The project is being handled by the state-owned water supply and drainage board, and the Colombo municipal council.
Water board officials said wastewater generated by the city today is discharged untreated into the sea through the two outlets to the north and south of the city.
The project will modernise Colombo's aging wastewater and sewerage disposal system and also add more people to the network.