Annual Report 2010 - Ministry of Finance and Planning

Ministry of Finance and Planning Sri Lanka > Annual Report 2010Financing for Power and EnergyElectricity is an essential requirementfor rapid economic and socialdevelopment of the country. TheNational Energy Policy and Strategiesenvisages providing electricity to allhouseholds by 2012 while maintainingthe electricity tariffs at an affordablelevel. In line with these targets thefocus of the foreign financing has beengiven to sustainable development ofenergy resources through developmentof renewable energy sources and smallscales hydro power plants.External Financing for Power andEnergy 2005 to 2010During the period of 2005-2010, SriLanka mobilized USD 1.9 billion fromdifferent external financial sources forpower sector development. Duringthis period, the highest commitmentwas made by the government of Chinawhile Asian Development Bank (ADB),Iran and the Government of Japanalso made a significant commitment.These four donors accounted for about92 percent of the total commitmentmade for the power and energy sectorduring the last six years.The government effort to improvedisbursement has led to increase theforeign finance utilization rate in 2010,and it has reported as the highest rateof disbursement during last six years.In 2010, two new agreements weresigned with the Government ofChina and the UniCredit Bank Austriato provide materials for NorthernProvince Power Sector DevelopmentProgram and Rehabilitation of OldLaxapana Power Station.Procurement of Material forthe Power Sector DevelopmentProgramme in the NorthernProvince (Uthuru Wasanthaya)The Government of China throughthe Exim Bank of China provided USD31.66 million to finance the project. Thepurpose of this project is to provideelectricity to 80,000 consumersliving in the Northern Province byconstructing 400 rural electrificationschemes.Rehabilitation of Old LaxapanaPower StationThe Old Laxapana Hydro Power Stationis more than 58 years old and alreadybeyond its accounting lifetime. Therecommendation was to rehabilitatethe power station before it reaches65 years. Accordingly, it is plannedto replace turbines, generators, andother main equipment. This project willenhance hydropower generation in thecountry and also reduce the cost ofpower generation. Further, it will alsoreduce the number of failures due toenhanced efficiency of the new system.The total cost of this project is USD37.7 million. Of this total cost, 85percent covered by the UniCreditBank Austria AG, by providing a CreditFacility Loan of USD 32.5 million. Atpresent, the project is at design stageand construction work of the projectwill commence in near future.Table 5.8 > Financial Progress of the Power &Energy Sector during 2005 - 2010YearCommitments(USD Million)Disbursements(USDMillion)2005 343.5 51.92006 156.9 62.62007 - 189.92008 74.3 130.42009 1,083.6 236.82010 199.0 719.1Total 1,857.3 1390.7USD Mn120010008006004002000Chart 5.7 > Commitments and Disbursements inPower & Energy Sector 2005 - 20102005 2006 2007 2008 2009 2010CommitmentsDisbusementYearSource: Department of External Resources259