PROJECT FUNDING

The Upper Kotmale Hydropower Project is funded by the Government of Japan on an Overseas Development Assistance (ODA) loan executed between the two governments on March 28, 2002. The loan is extended to Sri Lanka by Japan Bank for International Cooperation (JBIC), loan Agreement No. SL - P74. The details of the loan are as follows.

JBIC Provides Special Yen (ODA) Loan of 33,265 million yen to Sri Lanka
To Support Stable Power Supply

The Japan Bank for International Cooperation (JBIC; Governor: Kyosuke Shinozawa) signed a loan agreement with the Democratic Socialist Republic of Sri Lanka for a total loan of up to 33,265 million yen to be used for the Upper Kotmale Hydro Power Project being implemented by the Ceylon Electricity Board.

The loan agreement was signed on March 28 at its Head Office in Tokyo by H.E. Mr. Karunatilaka Amunugama, Ambassador Extraordinary and Plenipotentiary of Sri Lanka to Japan and JBIC Governor Kyosuke Shinozawa

Loan Amount and Conditions

* Interest rate for Special Yen (ODA) Loan

** Interest rate for special environmental project

Characteristics of ODA Loans to Sri Lanka

Previous ODA loans to Sri Lanka have consisted primarily of commodity loans to support the country's international balance of payments, but in the 1970s support began to shift toward loans for projects designed to improve the economic infrastructure, such as transportation (air, maritime, and railways, roadways, and bridges), electricity, communications, and irrigation projects. In the 1990s, the loans covered a wide range of sectors, including not only the economic infrastructure, but the social and environmental sectors as well. Since 1993, JBIC has been the top ODA loan donor to Sri Lanka.

This Special Yen (ODA) loan, which is based on "Medium-Term Strategy for Overseas Economic Cooperation Operations" set forth by JBIC in December 1999, will be used for the development of the economic and social infrastructures, thereby supporting the continued economic growth of Sri Lanka. The Upper Kotmale Hydro Power Project, which involves the construction of a hydropower station in the interior of Sri Lanka, will help the country keep up with the increasing demand for power, and provide an infrastructure that will allow for the stable supply of electricity, a necessary element for continued economic growth.

On the implementation of this project, efforts are being taken to minimize its impact on the environment, and the central government, local governments, and NGOs will work together toward the dual goals of continued economic growth and environmental protection.

Project Description

Upper Kotmale Hydro Power Project
(1) Background and necessity of the Project
Sri Lanka's Long-Term Generation Expansion Plan (2002-2016) estimates that peak demand in 2008, when this project is scheduled to begin operations, will reach 2,346 MW (actual demand in 2000 was 1,404 MW). The plan thus calls for a total facility capacity of 2,909 MW (actual capacity as of 2000 was 1,777 MW) to be secured by 2008.

According to the plan, the installation of hydropower plants will provide an additional 220 MW of electricity, of which 70 MW will be provided by the Kukule Hydro Power Plant (ODA yen loan provided in July 1994), and 150 MW will be provided by this project.

Most of Sri Lanka's hydropower resources have already been developed, making this project the last of the new large-scale hydropower plant projects. To expand Sri Lanka's power-generating capacity and to ensure a stable power supply that is not affected by the weather, there are plans to direct efforts toward the development of thermal power generation and thus to shift to a more balanced structure of electric power generation. However, since Sri Lanka is a country that lacks its own sources of fuel, it is important that it fully develop its hydropower sources, and this project is highly necessary for achieving this goal.

Purposes and description of the Project

This project will construct a runoff-river hydropower plant (150 MW) on the Kotmale River, a tributary of the Mahaweli River (upstream from the existing Kotmale Dam), to meet the need for power demand after 2008 in an environmentally and socially sound manner. By meeting the increasing demand for power, the project aims to contribute to the country's economic growth.

The loan will finance civil works, the installation of equipment and facilities, and consulting services (construction supervision, management-consulting).

The executing agency is the Ceylon Electricity Board (CEB) (Address: 50, Sir Chittampalam A Gardiner, Mawatha, Colombo 2, Sri Lanka, Phone: 94-1-335922, Fax: 94-1-421744).


Allocation

Re-payment Period
40 years (Including 10 years of grace period)