Sri Lanka: Clean Energy and Access Improvement Project

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During project preparation, Sri Lanka’s power sector was struggling to meet the demand for a reliable and affordable supply of electricity and improvements to the electricity transmission and distribution networks were much needed. Furthermore, as about 20% of rural households in the country did not have access to electricity, it was important to support low-income households to obtain electricity connections and thereby improve electricity access and electrification rates, especially in rural areas.  To meet these imperatives, the Asian Development Bank (ADB) approved two loans, aggregately amounting to $160 million, for the Clean Energy and Access Improvement Project in April 2009.

The project’s envisaged impact was facilitation of a reliable and affordable power supply to catalyze sustainable and inclusive economic growth in Sri Lanka. Its expected outcome was improved coverage and efficiency in service delivery by the state-owned electricity utility Ceylon Electricity Board (CEB) and its distribution subsidiary Lanka Electricity Company (Private) Limited (LECO). It included three investment components with five outputs: (i) energy efficiency, including strengthening the transmission and distribution network and central system control and demand-side management of municipal lighting; (ii) renewable energy development, comprising the removal of network bottlenecks for small hydropower plants (HPPs); and (iii) access for the poor, including strengthening the transmission network in the Eastern Province and credit support program for electricity connection for rural households.  The project, with ADB technical assistance support, also had two capacity development outputs.

During implementation, the scope of the energy efficiency component and transmission expansion in the Eastern Province was expanded to utilize loan savings and augment project outcome.  At completion, the project achieved or overachieved 80% of its output targets, albeit, it encountered significant delays that pushed back its completion by almost three years.  It added 409.5 megavolt-ampere (MVA) grid substation capacity and completed 94.5 kilometers (km) of transmission lines.  Total distribution capacity in LECO operation areas was increased by 70 MVA.  Installation of a state-of-the-art system control center (SCC) with a supervisory control and data acquisition (SCADA) system, an energy management system (EMS), and network-wide telecommunication system enabled centralized load dispatch and enhanced the reliability of power supply.

With grant financing from ADB’s Climate Change Fund, new and energy-efficient streetlight designs were developed, and pilot tested in selected urban, semi-urban and rural demographics. However, the plan to establish energy service company units within the CEB and LECO proved too complex and did not materialize mainly because of the required changes to organizational structure, funding requirements for new staff positions, and operational requirements. Implementing continuous improvements and rolling out the new designs countrywide to reach a 30% energy consumption reduction was therefore not achieved.

Addition of 220.5 MVA total power absorption capacity to the grid substations allowed small-scale HPPs to evacuate power to the national transmission network.  Installation of 100 km of transmission lines and addition of 63 MVA substation capacity improved electricity in the poverty-stricken Eastern Province of the country.  In addition, 56,069 poor households, comprising 93% of the target, were provided with electricity connections through a credit support program.  Though it fell short of meeting its output target in new connections, the project spurred the introduction of the “Samurdhi credit scheme,” a government rural electrification program for poor households that helped achieve the country’s goal of 100% electrification.

Because of successful output deliveries, the project was able to achieve its intended outcome. Total technical and commercial losses of the CEB network decreased from 15% of net generation in 2008 to 9.6% in 2016, exceeding the 12% target.  Unrestricted demand in the metropolitan areas was being met in full. Pending applications were approved for all small HPPs within the project area that could be feasibly connected to the grid, eliminating the connection wait list.  Power demand in the Eastern Province was fully met. In 2013, the CEB achieved cash breakeven after recording losses in 2011 and 2012; however, it has continued to record losses since then, except in 2015.

The Ministry of Power and Energy was the executing agency and the CEB and LECO were the implementing agencies.

Project Information
Project Name: 
Clean Energy and Access Improvement Project
Report Date: 
December, 2019
Main Sector: 
Project Number: 
Report Type: 
Project loan
Project grant
Goal 9: Industry, Innovation, and Infrastructure
Goal 8: Decent Work and Economic Growth
Goal 13: Climate Action
Loan Number: 
L2518, 2519, G0149
Source of Funding: 
OCR, COL/ADF, Climate Change Fund
Date Approved: 
L2518/2519: 31 December 2016, G0149: 31 March 2015
Report Rating: