Sri Lanka's parliament has approved a new law aimed at attracting investment in renewable energy and improving the financial performance of its state-owned power monopoly, as part of commitments made under a $2.9 billion IMF program.
The legislation, known as the Electricity Bill, was endorsed by a majority of 44 votes among the 225 lawmakers, according to Speaker Mahinda Abeywardena. Power and Energy Minister Kanchana Wijesekera highlighted the bill's objectives to bolster profitability in the Ceylon Electricity Board (CEB) monopoly and stimulate investment in the renewables sector.
“Sri Lanka has set a target of generating 70% of its power via renewables by 2030. It is estimated that in the next six years Sri Lanka will need $12 billion to meet this goal. So we need to open the sector to attract this investment,” Wijesekera stated.
The country, grappling with a severe financial crisis and economic downturn, aims to implement reforms to enhance the viability of state-owned enterprises. These reforms include restructuring the CEB to operate transmission, generation, and other services as separate entities.
Despite opposition from political parties and trade unions, citing concerns over increased ministerial powers and potential privatization, the newly passed law includes a three-year reform timeline. This timeline is intended to facilitate the establishment of wholesale power markets, open access, and regional power trading across south Asia.
In a bid to advance its renewable energy agenda, Sri Lanka recently signed a 20-year power purchase agreement with India's Adani Green Energy Ltd for the development of wind power stations, representing an investment of $442 million. Additionally, discussions with India center on grid connectivity and attracting further investment to bolster the country's renewable energy sector, with the long-term goal of exporting power to its neighboring giant.
