Fact Sheet: Metro Colombo Urban Development Project

April 5, 2013

The city of Colombo is the commercial and financial heart of Sri Lanka and accounts for almost 50% of the country’s GDP. Colombo hosts most of the country’s manufacturing facilities and services.

Although Sri Lanka’s economy is riding high on a wave of optimism engendered by the nation’s emergence as a middle-income country after 30 years of war, the city of Colombo has not been able to contribute its full potential to the growing economy. Harnessing the competitive advantages of the Colombo Metropolitan Region will be critical to overcoming tough challenges that Sri Lanka is likely to face in accelerating growth and competing with other regional and international players.

One of the main causes hindering Colombo’s economic potential has been its ill-preparedness to deal with frequent floods. In 2010 alone, damages incurred by floods to the economic and productive assets in the city were estimated at $50 million. While revitalizing the city’s run-down, over-capacitated urban infrastructure facilities and service systems is a top priority, finding sustainable solutions to grapple with the devastating effects of urban flooding will be as important in preparing the city to achieve its growth potential.

In March 2012, the World Bank provided a loan of $213 million to Sri Lanka in support of the government’s drive to transform Colombo city into a competitive hub by 2016. The loan assists crucial efforts carried out as part of the Metro Colombo Urban Development Project (MCUDP) which envisions developing the Colombo Metropolitan Area as the environmentally sustainable, modern capital of Sri Lanka.

The project’s objectives are:

  • To complement the present urban regeneration program of the government of Sri Lanka
  • To reduce the physical and socioeconomic impacts of flooding in the Metro Colombo Region
  • To improve priority local infrastructure and services to enhance urban regeneration

The project has three components.

Component 1: Flood and Drainage Management ($148 million)

Component 1 focuses on priority infrastructure investments for flood and drainage management in the Colombo Basin, as well as the development of an integrated flood management system (e.g. improve operation and maintenance of canals) and complementary demonstration interventions to enhance the quality and use of the water bodies.

  • Enhancement of drainage capacity in the Colombo Water Basin (primary and secondary canals)
  • Rehabilitation and upgrading of the micro-drainage system
  • Capacity enhancement for operation and maintenance
  • Beira Lake Linear Park and Beddagana Bio-diversity Park

Component 2: Urban Development Infrastructure Rehabilitation and Capacity Building for Selected Metro Colombo Local Authorities ($51 million)

Component 2 focuses on provision of capacity and technical, investment, logistical support for Metro Colombo local authorities.

  • Supporting local authorities to rehabilitate and manage their streets and drainage infrastructure
  • Implementing selected demonstration urban improvement investments
  • Equipment for operations and maintenance
  • Strengthening and capacity building of local authorities

Component 3: Implementation Support ($10 million)

Component 3 focuses on ensuring that the project is implemented effectively and efficiently.

  • Implementation support in the areas of project management, monitoring and evaluation, procurement, financial management and environmental and social safeguards
  • Public awareness and communications support
  • Support to project implementing agencies and project local authorities
  • Logistical support to the project management unit (PMU)
  • Support operating costs of the PMU, project implementing agencies, and local authorities