Malwathu Oya Hydro Project Cost Swells by 106% Following 6-Year Delay

The Sri Lankan Cabinet has approved the resumption of the Lower Malwathu Oya multipurpose hydro power project, revealing a staggering 106% increase in costs since its initial approval in 2019.

Financial Breakdown:

• 2019 Estimate: The project was originally approved in July 2019 with an estimated cost of Rs. 22.9 billion.

• 2025 Revised Cost: The new estimate submitted to the Cabinet in December 2025 has ballooned to Rs. 47.18 billion.

• Inflation Drivers: Analysts attribute the cost surge primarily to the collapse of the Sri Lankan rupee, which fell from approximately 176 to the US dollar in 2019 to over 300 in 2025, combined with global inflationary pressures.

Project Objectives:

Despite the inflated costs, the project remains a critical infrastructure priority for the region:

• Agriculture: It aims to provide water to 24,450 acres of existing farmland under the Giant’s Tank, 6,230 acres under the Akitamuruppu tank, and irrigate 2,000 acres of new land.

• Power Generation: The facility is expected to generate 4.28 Gigawatts (GWh) of hydroelectric power.

• Drinking Water: It will supply 2 million cubic metres of drinking water to local communities.

Context of Delay:

The project was halted shortly after its inception due to the global COVID-19 pandemic and Sri Lanka’s subsequent sovereign debt default. The resumption is part of a broader push to complete stalled infrastructure projects to stabilize the energy and agricultural sectors.

Source: EconomyNext – Malwathu Oya Project Cost Inflation