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The project is being implemented by the Ministry of Mahaweli Development and Environment with the financial assistance of Saudi Fund for Development (SFD), Kuwait Fund for Arab Economic Development (KFAD) and OPEC Fund for International Development (OFID).
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The proposed Kaluganga Reservoir will have a capacity of 265 million cubic meters of water and will divert 100 MCM annually to Moragahakanda Reservoir. It has been identified that the financial assistance received from the above lenders is not adequate to complete the project as the cost of the project increased during project implementation due to various reasons including unforeseen geological conditions in the foundations and necessary design revisions, a statement said. In order to partly finance the funding shortfall, KFAD agreed to provide a supplementary loan. This loan is provided at an interest rate of 1.5 % per annum with a repayment period 22 years.
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The Kuwait Fund for Arab Economic Development has already provided KD 10 million for this project in 2009. The OFID has also agreed to provide an additional loan of US$ 18 million.
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The signing of the agreement took place on 30th March 2017 at the office of KFAD in Kuwait. Hamad AL-Omar, Deputy Director General signed the agreement on behalf of the Kuwait Fund for Arab Economic Development while RHS Samaratunga, Secretary, Ministry of Finance signed on behalf of the Government of Sri Lanka.
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