The Asian Development Bank (ADB) has approved a $100 million policy-based loan to further support Sri Lanka in strengthening its power sector. This financing builds on earlier initiatives to establish a more stable and financially sustainable power sector.

This second subprogram of ADB’s Power Sector Reforms and Financial Sustainability Program will accelerate the unbundling of the Ceylon Electricity Board (CEB) into independent successor companies for generation, transmission, system operation, and distribution, as mandated by the Electricity Act of 2024 and its 2025 amendment. The phased approach ensures a structured transition, ensuring progress in reform actions and prioritizing financial sustainability.

“Sri Lanka has made important progress in stabilizing its economy and strengthening its fiscal position. A well-functioning power sector is vital for the country’s continued recovery and sustainable growth,” said ADB Country Director for Sri Lanka Takafumi Kadono. “ADB is committed to supporting Sri Lanka’s long-term development and advancing key reforms in the power sector. This initiative will enhance power sector governance, foster private sector participation, and accelerate renewable energy development to drive sustainable recovery, resilience, and inclusive growth.” 

To improve financial sustainability, the program will help implement cost-reflective tariffs and a comprehensive debt restructuring plan for the CEB. It will support the new independent successor companies in transparent allocation of existing debts. This will continue to strengthen their financial viability, enhance creditworthiness, and enable these companies to operate on a more sustainable footing.

The program also aims to strengthen renewable energy development and private sector participation by enhancing transparency and supporting power sector entities that are financially sustainable. It will enable competitive procurement for large-scale renewable energy projects and identified priority generation schemes, while upholding strong environmental standards.

Promoting gender equality and social inclusion is integral to the program. Energy sector agencies have implemented annual women’s leadership programs, adopted inclusive policies, and launched feedback mechanisms to ensure equitable participation of female consumers and entrepreneurs. The program includes targeted support for vulnerable groups, such as maintaining lifeline tariffs and implementing measures to soften the impact of tariff adjustments and sector reforms. 

ADB will provide an additional $2.5 million technical assistance grant from its Technical Assistance Special Fund to support program implementation, build the capacity of successor companies, and help develop their business plans and power system development plans. 

ADB is a leading multilateral development bank supporting inclusive, resilient, and sustainable growth across Asia and the Pacific. Working with its members and partners to solve complex challenges together, ADB harnesses innovative financial tools and strategic partnerships to transform lives, build quality infrastructure, and safeguard our planet. Founded in 1966, ADB is owned by 69 members—50 from the region.