Government gearing to face power crisis in 2009 - Treasury Secretary [Thursday, August 31, 2006 - 10.30 GMT]

POWER SECTOR: The Government is focusing to address immediate challenges in the power sector to face the power crisis in 2009. Funding on power generation, distribution and transmission are important factors to be addressed promptly to face the predicted crisis, Treasury Secretary Dr P.B Jayasundera said.

"We have not utlised funds on the power sector reforms which have expired due to the long delay. The funding arrangements on power generation will be put into operations mainly on immediate challenges in our power sector plan at this junctutre,'' Dr Jayasundera told a media conference.

A high level mission headed by Asian Development Board's Director General for South Asia, Kunio Senga, spent two days of intense discussion with the Government looking at concrete measures to improve ADB's funding portfolio.

Responding to a Government request, ADB and the Government jointly identified nearly US $ 71 million of ADB projects to be immediately cancelled or reallocated to improve the ADB portfolio.

Dr. Jayasundera addressing along with the visiting delegation said that revision of the portfolio of ADB funds is to ensure the active cost- effective portfolio for development in the medium to long terms. Each project is being studied case by case to ensure the success of development projects.

He said that we have to create non-performing or adequately performing projects into satisfactory and operational levels. Therefore, the Government took a bold decision on the future power sector reforms by initiating major power projects like Kerawalapitiya power plant, which is now in progress.

ADB Director General, South Asia Regional Department Kunio Senga said that ADB's active portfolio in Sri Lanka stands at 47 loans and grants totaling US$1.6 billion. During this mission ADB and the Sri Lankan Government took a close look at our portfolio and has had an intensive dialogue on efficient implementation of projects.

He said they also agreed on actions to facilitate effective implementation of projects such as review of contractor performance and increasing adoption of procedures by the Government.

"This is a significant move because it will allow funds to be reallocated to priority projects, for example, water supply expansion in Polonnaruwa, Batticaloa and eventually Muttur or be canclled. We have also identified a number of actions that will help slow moving projects to get back on track. ADB's proportion accounts for only about six per cent of its active portfolio.

Senga said that of particular significance is the cancellation of a US $ 30 million second tranche of the power sector form programme. It has delayed a number of times this decision, as we seemed close to reaching a consensus on the way forward. They also expect to assist in power sector reforms when the Government implements the national economic strategy in the future, Senga said.

ADB South Asian Energy Director Thevakumar Kandiah said that they remain convinced that increasing the power generation capacity, addressing institutional reforms and restructuring the finances of CEB are much needed for the financial sustainability of the sector.

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Last Updated Date: August 31, 2006 -10.30 GMT