US $ 120M ADB loan for power network [February 02 2011]

The Asian Development Bank has granted a loan of US S 120 million to Sri Lanka to expand and improve power network.

The funding includes a credit line for private development of small hydro schemes in the country.

ADB's Board of Directors approved the loan, along with a technical assistance grant for the Sustainable Power Sector Support Project which will be used to build hundreds of kilometers of new transmission lines, to strengthen distribution systems in rural areas, and to electrify about 12,000 households in remote villages. The project will target regions such as Eastern and Uva Provinces where electrification is below the national average and the power supply unreliable.

"This project will help expand coverage, and improve the efficiency and reliability of electricity supplies in areas that require them most urgently, thus supporting the government's goal of providing nearly 100% of households in the country with electricity by 2016," said Mukhtor Khamudkhanov, Senior Energy Specialist at ADB.

The project will also help the government reduce imports of expensive, polluting fossil fuels by providing a credit line of nearly $1.3M to private developers for about 19 targeted small hydropower facilities and by financing the detailed engineering design of a 30MW hydropower plant. The technical assistance will help create a national energy efficiency strategy and implement urgent energy efficiency policy initiatives.