AFD lends Rs. 8 b for two power projects

Thursday, 8 October 2015 00:20 - - {{hitsCtrl.values.hits}}

Two loan agreements were signed between the Government of Sri Lanka and the French Development Agency (AFD) for two projects amounting to EUR 30 m and EUR 22 m.

Treasury Secretary Dr. R. H. S. Samaratunga and AFD’s Director for Asia Pascal Pacaud signed the agreements at the Ministry of Finance, the organisation said in a statement.

Signature of these agreements is a result of an in-depth appraisal aimed at improving the quality of electricity in Sri Lanka by increasing the grid power absorption capacity from renewable energy plants at sensible generation cost and reducing technical losses across the network on the transmission grid, the organisation said.

The first project, ‘Construction of Four Grid Substations and Related Transmission Line’ will include the construction of four grid substations in Ragala, Wewalwatte, Nawalapitiya and Maliboda areas to absorb the electricity from the 86 tentative mini-hydropower plants and the building of stations.

The EUR 22 m project is co-financed by the Asian Development Bank (ADB), as part of the Green Power Development and Grid Efficiency Improvement Program (GPDGEIP). Procurement of the second project will be delegated to ADB, it noted.

The projects will reinforce private sector involvement in electrical plant investment through the establishment of new Independent Power Producers. In addition, increasing connection capacity and strengthening the network will help to secure the electricity supply necessary to support the country’s economic growth.

In addition, the Ceylon Electricity Board’s financial position will be improved through reducing losses and by substituting the electricity sourced from thermal installations at the fringe with that of mini-hydropower plants. The mini plants have a lower feed-in tariff per kWh than that of thermal plants. Both projects will be implemented by the Ceylon Electricity Board (CEB).