ADB approves $ 115 loan for power sector

The Asian Development Bank (ADB) has approved a loan of $ 115 million and $ 3.8 million in grants  to help Sri Lanka meet its goal of achieving 100% electrification and improve the reliability of its electricity supply, including in former strife-torn areas and on small isolated islands.

The grants comprise $ 2 million from the Japan Fund for Poverty Reduction and $ 1.8 million from the Clean Energy Fund under the Clean Energy Financing Partnership Facility, a multi-donor facility administered by ADB.

“Sri Lanka’s national electrification rate has gone from 29% to 98% in the space of 25 years, but some areas particularly in former conflict-affected zones and on small isolated islands still struggle with an unreliable power supply,” said Mukhtor Khamudkhanov, an ADB Principal Energy Specialist. 

“Small island communities are forced to use expensive, inefficient diesel generation sets that deliver only intermittent electricity supplies. 

The project will help meet the needs of areas that have been missing out through upgrades to the medium voltage network, the rollout of over 2,300 kilometers of low voltage line extensions, and the construction of hybrid renewable energy mini-grids.”

Hybrid renewable energy systems using a combination of wind, solar and efficient diesel generation, along with the installation of energy-storing long life lithium-ion batteries will provide a reliable electricity supply for communities on three isolated islands in the Jaffna area of the Northern Province (Analativu, Delft, and Nainativu). A renewable energy micro-grid will also be installed in Western Province.

To upgrade the existing medium voltage network, new lines and associated equipment will be installed, while the rural electrification network will be extended with thousands of kilometers of low voltage lines put in place to connect households to the national grid, and thousands of distribution meters with a remote reading facility installed. 

The project includes a micro-grid pilot scheme, financed by the Clean Energy Fund, which will demonstrate cost-effective management of power resources and reduce the burden on the national grid. It is the first time this concept is being trialed in Sri Lanka. 

The assistance from Japan will be used to help train rural community members on the safe use of electrical equipment and on potential livelihood opportunities arising from reliable power supplies.  Local community members will also be tapped to work in maintenance teams to carry out basic repairs and to operate and maintain the hybrid systems.

Improvements to the medium voltage network, meanwhile, will enhance the quality and reliability of electricity supplied to more than 493,000 customers, while the rural upgrades will help deliver reliable electricity to over 35,700 rural households.

The project will run for five years with an expected completion date in September 2021.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB in December 2016 will mark 50 years of development partnership in the region. It is owned by 67 members—48 from the region. In 2015, ADB assistance totaled $27.2 billion, including cofinancing of $10.7 billion.