On Monday, the Asian Development Bank (ADB) and the Government of Sri Lanka signed a $100 million loan agreement for Subprogram 1 of a policy-based loan (PBL) aimed at supporting significant reforms in the country’s power sector.
This loan is part of a broader $300 million programmatic approach PBL, which includes three subprograms designed to enhance the financial sustainability and operational efficiency of Sri Lanka’s power sector.
Treasury Secretary Mahinda Siriwardana and ADB Country Director Takafumi Kadono were present to sign the agreement.
The Power Sector Reforms and Financial Sustainability Program will complement the International Monetary Fund’s Extended Fund Facility arrangement. It aims to improve sector efficiency, attract private investments, promote renewable energy, and modernize power grids.
Key objectives of the program include:
- Institutional reforms to establish independent companies with defined roles.
- Strengthening corporate governance and financial sustainability within the sector.
- Implementing a new national tariff policy for cost-reflective tariffs.
- Accelerating renewable energy investments through updated feed-in tariffs, grid integration, and competitive procurement frameworks.
- Enhancing women’s participation in the power sector through supportive policies.
Additionally, ADB will provide a $1 million technical assistance grant from its Technical Assistance Special Fund to aid in program implementation, capacity building, and development of business and power system plans.
ADB, established in 1966, aims to foster a prosperous, inclusive, resilient, and sustainable Asia-Pacific region, with 68 member countries, including 49 from the region.