Sri Lanka has strengthened its road network especially after the end of a 30-year war but its upkeep in good condition is also costly.
Sri Lanka already taxes petrol, private cars and motor cycles (which are light and do less damage to roads) at high rates but keeps taxes on diesel and heavy commercial vehicles low in a discriminatory state intervention instead of following a just rule of law.
Information minister Keheliya Rambukwelle said 106 million US dollars will come from the government and the cabinet of ministers had given the nod to go ahead with the loan.
The first 100 million tranche ADB loan is in expected October 2014 improving and maintaining 560 kilometres of rural access roads and 130 kilometers of national roads in the Southern Provinces with a domestic component of 18 million US dollars.
The loan from the concessionary Asian Development Fund window will come at 2 percent a year with a 5 year grace period and 25 year payback.
Other tranches will come in December