The Government of Sri Lanka and the World Bank signed a loan agreement in the amount of $69.33 million for the Kandy Multimodal Transport Terminal Development Project, which will develop the Good Shed terminal in Kandy. Located at the city center and providing access to the railway station, the modernized terminal will integrate rail, bus, three-wheeler, and pedestrian traffic to make it safer and more efficient.

Mr. Sajith Attygalle, Secretary to the Ministry of Finance, and Faris H. Hadad-Zervos, World Bank Country Director for Maldives, Nepal and Sri Lanka, signed the agreement on behalf of the government and the World Bank, respectively.

Kandy, is the capital city of the Central Province of Sri Lanka; the Central Province contributes 11.5 percent to the country’s GDP, second only to the Western Province. The city is also a major tourist attraction and was declared a UNESCO World Heritage Site in 1988. Kandy’s central location, with road access to all other regions of the island, offers it the potential to become a residential and commercial hub. On a weekday, nearly 389,000 commuters come into the city by bus or rail for education, employment and tourism-related purposes. Traffic congestion and transport safety hinders the city’s development potential and Kandy accounts for a high rate of road accidents in Sri Lanka.

Currently, the Good Shed terminal lacks the critical infrastructure—such as adequately planned bus bays, parking areas for buses, waiting and queuing areas for passengers, adequate sanitation facilities, and centralized ticket/information counters—needed to accommodate the high volume of bus and passenger traffic. The lack of segregation of bus and pedestrian movement around the area poses significant safety risks for pedestrians. Lack of safe walking paths and pedestrian-friendly infrastructure has added to the traffic congestion and has created safety risks.


“Kandy will benefit significantly from a well-planned urban transport network that enhances accessibility to and from the city, efficient mobility within the city region, and its attractiveness as a tourist destination,” said Faris H. Hadad-Zervos, World Bank Country Director for Maldives, Nepal and Sri Lanka. “The project is also critical for the city’s post-COVID economic recovery because it will create many short-term employment opportunities and address pandemic-risk in the design and modernization.”

Given the number of passengers that use public transport in Kandy, the Good Shed terminal is a potential hot spot for pandemic virus transmissions, unless the risks are effectively mitigated. The existing terminal is not capable of safe full or even partial passenger operations during a pandemic. The frequent over-crowding and lack of space during peak hours does not allow for adequate social distancing, sanitary facilities are insufficient, there are no feasible measures to allow for effective sanitary practices before and after bus trips.

“This project is part of comprehensive transport planning and improvements currently underway in the Kandy city region,” said Winnie Wang, Senior Transport Specialist and Task Team Leader of the project. “It will lead to less congestion in the city center, safer and faster commutes for public transport and non-motorized transport users, and greater accessibility to markets, employment, schools, and healthcare facilities.”

The project will be implemented by the Ministry of Urban Development and Housing. The total project cost is $69.33, with $64.33 million through an International Development Association (IDA) concessional credit with maturity of 30 years and a 5-year grace period. The remaining $5 million is provided through an IDA non-concessional credit with maturity of 10 years and 5-year grace period.


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