$160m ADB loan :
Boost for Lanka's power program
The Government's push to expand and improve its electricity services,
especially to the poor and those living in conflict-affected areas, will
receive support from the Asian Development Bank (ADB).
ADB's Board of Directors approved loans of US$135 million from its
Ordinary Capital Resources (OCR) and a further $25 million from its
concessional Asian Development Fund (ADF) for the Clean Energy and
Access Improvement Project (Sri Lanka). The funds will be used to
support energy efficiency improvements, to develop the use of renewable
energy, and to increase connections and services to rural households.
"Sri Lanka's power sector has struggled for decades to meet rising
demand and to provide efficient and cost-effective electricity services.
Around 20 percent of households still lack electricity access the
share of thermal power in the power generation mix has surged
dramatically from one percent of the total in 1986 to 58 percent in
2008," ADB reports.
The Government has launched a 10-year development plan to address
these constraints and the project will support the CEB and the Lanka
Electricity Company to improve coverage and service efficiency.
The initiatives will include modernizing and upgrading the country's
transmission system and launching a demand-side management program for
public lighting.
Support for renewable energy will add 200 MW of hydro-generated
electricity to the national grid and encourage private sector investment
in the industry. At least 60,000 poor households will be connected to
electricity services through micro-credit support."The access for the
poor component will directly benefit the Eastern Province which has been
severely affected by the conflict as well as other poor regions," says
Tomoyuki Kimura, Principal Energy Specialist with ADB's South Asia
Department.
The loans cover 85 percent of the project cost of $188.2 million. The
demand-side management initiative will receive $2.2 million from ADB's
Climate Change Fund.
The OCR loan has a 25-year term, including a grace period of five
years, with the interest rate set in accordance with ADB's London
interbank offered rate.
The ADF loan of 32-years will carry an interest charge of 1.0 percent
per annum during the eight year grace period, and 1.5 percent for the
balance.
The Government will also provide the equivalent of $24 million.
Technical assistance grants of $3.8 million will be given to support the
project implementation and to strengthen capacity of the Public
Utilities Commission of Sri Lanka (PUCSL).
PUCSL, as the independent regulatory body, will play a critical role
in efficient regulation of the power sector under the recently passed
Sri Lanka Electricity Act.
ADB will provide $1 million from its regular TA funding program, with
$800,000 from the Climate Change Fund and $2 million from the Japan
Special Fund, administered by ADB. The Government will provide $950,000
in-kind.
The Power and Energy Ministry will be the executing agency for the
project which is due for completion in May 2013. |