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.