By: Staff Writer

March 20, Colombo (LNW): The Asian Development Bank (ADB) has approved a $200 million loan to upgrade Sri Lanka’s power sector infrastructure, enhancing the reliability of transmission and distribution networks and facilitating greater integration of renewable energy.

The Cabinet of Ministers on Monday approved the launch of a procurement process to select consultants for the Electricity Sector Strengthening and Renewable Power Consolidation Project, backed by funding from the Asian Development Bank (ADB).

The project aims to address rising electricity demand by upgrading the transmission and distribution networks managed by the Lanka Electricity Company Ltd., (LECO) and the Ceylon Electricity Board (CEB).

“Driving power sector reforms, combined with targeted infrastructure interventions, is essential to facilitate competitive renewable energy development and reduce power generation costs,” said ADB Country Director for Sri Lanka Takafumi Kadono. “By expanding and modernizing infrastructure and incorporating digitalization solutions, this project will support the government’s goal of increased integration of renewable energy in the electricity mix, reduce power interruptions, and minimize transmission and distribution losses.

Sri Lanka achieved 100% household electrification in 2016. Peak demand reached around 2,800 megawatts (MW) in 2023, including contributions from distributed renewable energy, and is projected to grow significantly by 2030. While Sri Lanka’s total installed power generation capacity reached 5,191 MW in 2023, about 50% of the country’s electricity generation in 2023 came from thermal power plants, underscoring the challenges in transitioning to a more sustainable energy mix. In its updated nationally determined contribution, the government has set an ambitious target of 70% electricity generation from renewables by 2030 and carbon neutrality in electricity generation by 2050.

The Power System Strengthening and Renewable Energy Integration Project will enhance climate resilience and expand the capacity of transmission and distribution networks, enabling greater integration of renewable energy. The project will expand the 220-kilovolt and 132-kilovolt transmission infrastructure with new transmission lines and substations, modernize the medium voltage distribution network, and upgrade grid protection systems. The project will introduce Sri Lanka’s first grid-scale battery energy storage system at the transmission level, establish a renewable energy center to forecast and monitor renewable energy generation, and implement network automation systems with SCADA and remote terminal units, providing operators with real-time data and alerts to ensure efficient power delivery.

The approval of this project reflects the significant progress made by Sri Lanka in advancing power sector reforms, which aims to enhance financial sustainability, ensure cost recovery tariff revisions, and competitive renewable energy development. ADB’s support for infrastructure upgrades is contingent on these reforms, recognizing their critical role in renewable energy integration and improving the sector’s overall performance.

The project will strengthen the institutional capacities of Ceylon Electricity Board (CEB) and Lanka Electric Company (LECO)—the only utilities in the country responsible for power delivery to end-consumers. The project will improve their ability to integrate and manage renewable energy systems, adopt digital solutions, and enhance hosting capacity of rooftop solar installations.

Various career development activities for CEB and LECO female staff, awareness-raising programs on safe and productive use of electricity, training on adopting clean energy solutions for women-led groups and businesses will be implemented.

Of the total amount, $150 million will be provided to CEB and $50 million will go to LECO. Both financing will be guaranteed by the Democratic Socialist Republic of Sri Lanka.

By: Staff Writer

March 20, Colombo (LNW): Sri Lanka’s tea industry experienced a dip in exports during February 2025, despite showing positive growth in some of its key international markets. The total quantity of tea shipped out in February amounted to 20.40 million kilograms, marking a decline of 1.91 million kilograms compared to 22.31 million kilograms in February 2024. According to Forbes & Walker, this downturn was seen across most categories, except for packeted tea, which continued to perform well.

The Free on Board (FOB) value for February 2025 was recorded at Rs. 1,737.25 per kilogram, reflecting a decrease of Rs. 51.91 per kilogram when compared to Rs. 1,789.43 per kilogram in the same month last year. However, in US Dollar terms, there was a slight increase of $0.13 per kilogram, indicating some resilience in the global market.

For the first two months of 2025, cumulative tea exports stood at 39.77 million kilograms, a drop of 1.30 million kilograms from 41.07 million kilograms in the same period in 2024. While tea packets, tea bags, and instant tea categories reported growth, the bulk tea and green tea sectors experienced a decline. The overall FOB value for January-February 2025 was Rs. 1,730.34 per kilogram, showing a decrease of Rs. 40.58 per kilogram from Rs. 1,770.92 per kilogram in the first two months of 2024. Despite this fall in Rupee terms, all categories, except instant tea, experienced gains when measured in US Dollar terms.

Iraq emerged as the leading importer of Ceylon Tea, importing 5.96 million kilograms in the first two months of 2025, reflecting a 13% increase year-on-year (YoY) from 5.30 million kilograms in 2024. Russia, the second-largest importer, saw a 10% YoY decline, bringing in 4.08 million kilograms compared to 4.52 million kilograms in 2024. Libya, in third place, recorded a remarkable 653% increase in imports, reaching 3.63 million kilograms from just 0.48 million kilograms in the previous year.

Other major importers such as the UAE and Turkey experienced notable declines, with the UAE seeing a 44% YoY decrease to 2.78 million kilograms, and Turkey a 34% drop to 1.96 million kilograms. On a more positive note, Chile’s imports increased by 26%, reaching 1.84 million kilograms. Saudi Arabia and China each imported 1.59 million kilograms, while Azerbaijan followed closely with 1.50 million kilograms. Iran, however, saw a sharp 55% decline, importing only 1.29 million kilograms compared to 2.9 million kilograms in 2024.

These mixed results highlight the volatility of Sri Lanka’s tea export market, where some regions have seen growth, while others have faced setbacks, signaling the need for continued market adaptation and strategic approaches.

By: Staff Writer

March 20, Colombo (LNW): Sri Lanka currently benefits from the European Union’s Generalised Scheme of Preferences Plus (GSP+) program, which grants preferential access to EU markets. However, continued eligibility for these trade privileges depends on adherence to international conventions. The upcoming assessment by an EU delegation will play a critical role in determining Sri Lanka’s future under this scheme.

The Sri Lankan government faces pressure to fulfill several obligations, including repealing the Prevention of Terrorism Act (PTA) and amending the Online Safety Act, to meet the updated requirements for GSP+ eligibility. Additionally, improvements in anti-corruption measures are necessary to align with the EU’s revised criteria for beneficiary countries, which will come into effect in 2027.

As of 2023, the EU is Sri Lanka’s second-largest trading partner, accounting for 12.4% of the country’s total trade. The primary exports to the EU include textiles and rubber products, with 49% of Sri Lanka’s total EU exports benefiting from GSP+ preferences, and a preference utilization rate of 59%.

The current GSP+ scheme remains valid until 2027, but Sri Lanka must demonstrate consistent implementation of international conventions to maintain these benefits. The EU regularly monitors compliance, and in October 2024, Sri Lanka reaffirmed its commitment to strengthening trade ties with the EU, particularly emphasizing the role of GSP+ in boosting exports.

Next week, an EU delegation will visit Sri Lanka to evaluate the country’s adherence to GSP+ requirements. This visit underscores the importance of compliance with international standards to retain preferential trade access, which is crucial for Sri Lanka’s export-driven economy.

A recent report by the Institute of Policy Studies (IPS), titled “Who Stands to Lose? The Effects of GSP+ Withdrawal on Sri Lanka’s Exports and Labour Force,” highlights the potential economic repercussions if Sri Lanka loses GSP+ benefits. The report underscores the significance of the scheme for the country’s export sector and labor market, reinforcing the necessity of continued compliance with EU requirements.

GSP+ serves as a special incentive program promoting sustainable development and good governance. It grants zero tariffs to economically vulnerable low- and lower-middle-income countries that implement 27 international conventions covering labor rights, human rights, environmental protection, and governance. Compliance with these conventions, particularly those related to environmental sustainability and governance, will be mandatory under the revised framework. Furthermore, the EU has established a mechanism for the swift withdrawal of GSP+ benefits if a country fails to meet its obligations.

Under the new system, beneficiary countries will be given a two-year transition period to ratify newly added conventions. Additionally, they must submit detailed implementation plans outlining their strategies for complying with all required conventions. The EU has already made it clear that Sri Lanka’s current form of the PTA is unacceptable and requires reform.

 The revised GSP+ framework will place greater emphasis on good governance, including anti-corruption measures such as stricter laws to combat bribery, the implementation of transparent public procurement procedures, and enhanced mechanisms to prevent corruption.

Sri Lanka previously lost its GSP+ status but regained it in 2017 after pledging to repeal the PTA. The country’s trade volume with the EU currently stands at USD 3.2 billion, with a trade balance favoring Sri Lanka. Given the importance of GSP+ in facilitating trade, ensuring compliance with EU requirements is vital for sustaining economic growth and maintaining market access.