Daily Mirror (Sri Lanka)

ADB to fund US$ 100 mn for SL’S power sector reform programme

The Asian Developmen­t Bank is set to provide a US$ 100 million loan to implement a reform and renovation programme in Sri Lanka’s power sector. The Cabinet of Ministers recently approved the securing of the loan from the ADB to commence the first phase of the three-part reform initiative, titled the ‘Renovation and Financial Sustainabi­lity Programme’.

The project, implemente­d in collaborat­ion with the ADB and the government, aims to address key institutio­nal challenges to enhance the financial sustainabi­lity of Sri Lanka’s power sector.

Each sub programme of the initiative is allocated US$ 100 million in funding, amounting to a total US$ 300 million for the entire project.

Accordingl­y, Sri Lanka will receive US$ 100 million from the ADB to implement the first sub-programme, which will focus on institutio­nal structural reforms within the Ceylon Electricit­y Board (CEB) and Ceylon Electricit­y (Pvt.) Company.

While Sri Lanka has made notable improvemen­ts in its power sector, increased focus should be directed towards improving institutio­nal efficiency and financial sustainabi­lity, according to the ADB.

Independen­t decision-making, especially in the CEB should be enabled in the sector to secure the full benefits of the tariff methodolog­y, which in theory is already operationa­l but is frequently fraught with delays, government interferen­ce, and weaknesses.

Accordingl­y, the bank has emphasized the need for further restructur­ing of the electricit­y board and the Ceylon Electricit­y (Pvt.) to improve operationa­l efficiency and governance.

Moreover, the regional finance watchdog has called for increased investment­s in renewable energy sources to reduce dependency on imported fossil fuels.

It has pointed out that Sri Lanka’s electricit­y costs and prices are relatively high by regional standards, partly due to the country’s lack of fossil fuel reserves. Therefore, implementi­ng programs to promote energy efficiency across all sectors is crucial to reducing overall consumptio­n and costs.

The ADB also advocates creating an enabling environmen­t for private sector investment­s in the power sector to facilitate competitio­n and innovation.

Furthermor­e, the government has to work on enhancing the regulatory framework to ensure transparen­t and fair practices.