The Asian Development Bank (ADB) has announced the approval of a $100 million policy loan aimed at bolstering reforms in Sri Lanka's power sector.
This initiative, aligned with an International Monetary Fund-backed reform program, seeks to enhance the country's energy infrastructure and sustainability amidst economic challenges.
Jaimes Kolantharaj, ADB’s Principal Energy Specialist, emphasized the critical role of developing competitive renewable energy sources and ensuring a transparent regulatory framework. "Developing cost-competitive renewable energy and providing reliable and affordable electricity supply...will help Sri Lanka drive economic growth and address the current financial and economic crisis," stated Kolantharaj in a press release.
The loan program is geared towards supporting reforms introduced under the Electricity Act, focusing on institutional and regulatory enhancements to improve operational sustainability. A significant aspect of the initiative includes advancing renewable energy development, aligning with Sri Lanka’s national commitments towards clean energy transition.
Key reforms under the program include implementing a new national tariff policy to ensure financial viability through cost-reflective tariffs. This entails periodic tariff revisions for small power plants and rooftop solar users, integrating renewable energy projects into the national grid, and implementing a competitive procurement framework for renewable energy ventures.
Furthermore, the program aims to increase women’s participation in the power sector by promoting policies that encourage equitable involvement of female customers, entrepreneurs, and disadvantaged community groups.
To facilitate effective implementation, ADB will allocate a $1 million technical assistance grant from its Technical Assistance Special Fund. This grant will support capacity building within Sri Lanka’s electricity companies, aiding in the development of business plans and overall power system strategies.
