ADB lends 100 million dollars for Sri Lanka’s power sector restructuring

Sri Lanka has secured a 100 million dollar policy loan from the Asian Development Bank (ADB) to advance reforms under the Power Sector Reforms and Financial Sustainability Program. The funding supports the unbundling of the Ceylon Electricity Board (CEB) under the 2024 Electricity Act and its 2025 amendment.

The reforms aim to create separate entities for generation, transmission, system operation and distribution, introduce cost reflective tariffs and implement a clear debt restructuring plan. CEB carries a debt of 200 billion Sri Lankan rupees. ADB will also provide a 2.5 million dollar technical assistance grant for implementation support and business planning. The loan forms part of the government’s wider IMF-linked reform programme.

ADB Country Director for Sri Lanka Takafumi Kadono said the initiative will strengthen governance, expand private sector participation and accelerate renewable energy development.

Critics argue the 2025 amendment dilutes the 2024 Act by delaying the planned creation of four generation and four distribution companies. The amendment also increases government ownership in the new Transmission Company to 100 per cent from 51 per cent, while offering limited incentives for rooftop solar and grid scale storage. The World Bank and the Japan International Cooperation Agency have raised similar concerns.