Sri Lanka secures $100m loan for power sector reform

Unbundling the CEB boosts financial sustainability and opens the door for renewables.

Sri Lanka has secured a $100m policy-based loan to enhance the capacity of its power sector.

According to the Asian Development Bank (ADB), this is the second subprogram of its Power Sector Reforms and Financial Sustainability Program. This will “accelerate the unbundling of the Ceylon Electricity Board (CEB) into independent successor companies for generation, transmission, system operation, and distribution, as mandated by the Electricity Act of 2024 and its 2025 amendment.”

The phased approach ensures a structured transition, ensuring progress in reform actions and prioritising financial sustainability.

To improve financial sustainability, the program will help implement cost-reflective tariffs and a comprehensive debt restructuring plan for the CEB. It will support the new independent successor companies in the transparent allocation of existing debts.

The program also aims to strengthen renewable energy development and private sector participation by enhancing transparency and supporting power sector entities that are financially sustainable. It will enable competitive procurement for large-scale renewable energy projects and identified priority generation schemes, while upholding strong environmental standards.

ADB will also provide an additional $2.5m technical assistance grant from its Technical Assistance Special Fund to support programme implementation, build the capacity of successor companies, and help develop their business plans and power system development plans.