ADB and Sri Lanka sign $100 million loan agreement for power sector reforms

The Asian Development Bank (ADB) and the government of Sri Lanka signed a loan agreement this week for power sector reforms in the country.

The agreement provides US$100 million for sub-programme 1 of a policy-based loan (PBL) to support reforms aimed at enhancing the financial sustainability of the power sector.

This loan is part of a broader programmatic approach, consisting of three sub-programmes totaling US$300 million, dedicated to transforming the power sector.

ADB approval for the programme was given on 11 July.

The programme will complement the International Monetary Fund’s (IMF) Extended Fund Facility (EFF) arrangement, bolster the operational efficiency and competitiveness of the power sector, create a conducive environment for private investments, boost renewable energy development, and modernize power grids.

To accelerate investments in renewable energy, the programme will support multiple initiatives under the renewable energy expansion plans for 2023-2030.

Key initiatives include periodic revisions of feed-in tariffs for small power plants and rooftop solar users, facilitating the integration of renewable energy projects into the national grid, and the effective application of a competitive procurement framework for renewable energy projects.

The programme will also support increased participation of women in the power sector by developing policies to promote equitable involvement of female customers, female entrepreneurs, and women from disadvantaged community groups.