World Bank to Fund Sri Lankan Rural Electrification

The World Bank has announced the approval of a US$75 million International Development Association (IDA) credit and a US$8 million Global Environment Facility (GEF) grant for a project to improve the quality of rural life in Sri Lanka and promote private power generation using Renewable Energy resources.

COLOMBO, Sri Lanka – June 25, 2002 [] The Renewable Energy for Rural Economic Development Project will bring electricity to remote communities and individual households through village-led electricity societies and solar energy dealers, support the increase of non-farm incomes of rural households though productive uses of electricity, and improve the delivery of social services such as health and education through customized electricity provisions. Moreover, it will strengthen the generation supply of the national grid by supporting private sector-owned mini-hydro, wind, and other Renewable Energy projects that feed into the grid. “The project will particularly help extend electricity access and associated growth opportunities to the people now beginning to rebuild their lives in the northern and north-eastern parts of the country affected by conflict,” said Task Manager S. Vijay Iyer. The project will also remove barriers and reduce implementation costs for Renewable Energy projects and energy-efficient initiatives. On a larger scale, it will contribute to global efforts to reduce atmospheric carbon emissions. This effort is being supported by the GEF, a partnership among the United Nations Development Program, the United Nations Environment Program and the World Bank. The GEF provides additional funding to projects, helping them to achieve global environmental benefits. The new project will build on the success of the on-going World Bank/GEF-financed Energy Services Delivery Project, which helped to commercialize development of Renewable Energy in Sri Lanka. The main goal of the project is to provide direct electricity access to 100,000 households and 1,000 rural small and medium enterprises and public institutions. This would contribute significantly to Sri Lanka’s stated intention of making electricity accessible to at least 75 percent of its population by 2007. The project will also support installation 85 MW of privately owned grid-connected generation capacity. As a result, by the end of the project, privately-owned Renewable Energy should account for more than 5 percent of the total electricity generating capacity. The project will support the current rapid expansion of the solar home system industry through the marketing of smaller, more affordable systems to poorer households, and expanding services to productive applications. A typical solar home system offers sufficient electricity for several light bulbs, radio and a television for an individual household. Solar home systems are sold by private sector companies through more than 50 solar centers throughout the nation. The aim is to support the sale of 85,000 such systems and establish this industry on a fully commercial basis.
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