This proposal is a continuation of joint research carried out over the last 4 years. The project will establish a local minigrid incorporating high performance computing resources and extend the grid over the interuniversity backbone network to at least two other local universities which will then be linked to the Swedish cluster. Initial performance evaluation would be done for specific characteristics of the local minigrid against features that are peculiar to a county like SL. Following the successful completion of the initial phase, we expect to start detailed investigations on two fronts: algorithm design for selected classes of problems, especially heuristic optimizations targeting the grid, and, secondly on middleware design for the so called OGSA. The system will then provide a worthwhile computational resource, backed by a knowledgable local staff that could form the basis for a significant enhancement in computational research in many areas. The development cluster will be moved from UU to UCSC early in 2006. Starting with software development on these local facilities, large scale computational science research in Sri Lanka could if necessary make use of even more computing power by accesing links to computational grids outside the country.