Sri-Lanka-Energy-Infrastructure-Sector-Assessment-Program-Executive-Summary.Pdf
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Report No: AUS0000803 . Public Disclosure Authorized Sri Lanka Energy InfraSAP Final Report . Public Disclosure Authorized April 30, 2019 . EAE . Public Disclosure Authorized Public Disclosure Authorized © 2017 The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved This work is a product of the staff of The World Bank and the International Finance Corporation (IFC). The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the Executive Directors of The World Bank, the Directors of the IFC, or the governments they represent. The World Bank and IFC do not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank or IFC concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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Table of Contents List of Figures ............................................................................................................................................... iii List of Tables ................................................................................................................................................ iv Abbreviations .............................................................................................................................................. iv Acknowledgements ...................................................................................................................................... 1 Executive Summary ...................................................................................................................................... 2 1 Overview of Sri Lanka’s Power Sector ............................................................................................... 24 2 Energy Investment Plans and Financing Needs ............................................................................... 257 3 Binding Constraints to Financing ..................................................................................................... 388 4 Roadmap to Address Key Constraints ............................................................................................. 554 Annexes ...................................................................................................................................................... 69 References ................................................................................................................................................ 118 ii List of Figures Figure 1: Average Power Generation Cost from Current Sources ...................................................................... 18 Figure 2: Co2 emissions per capita ..................................................................................................................... 19 Figure 3: CO2 Savings in Base Case Compared to Reference Case ..................................................................... 20 Figure 4: LNG Import Prices ................................................................................................................................ 22 Figure 5: Base Case Capacity Addition as per LTGEP 2018-2037 (MW) .............................................................. 25 Figure 6: Capital Investment as per LTGEP 2018-2037 Base Case ...................................................................... 26 Figure 7: Potential Sources of Investment for Power Sector .............................................................................. 32 Figure 8: CEB Profitability Ratios ........................................................................................................................ 40 Figure 9: CEB’s Cash Flow Analysis ..................................................................................................................... 40 Figure 10: CEB’s Debt (2016) .............................................................................................................................. 41 Figure 11: Average Weighted Prime Lending Rate ............................................................................................. 44 Figure 12: Debt Trading Statistics in Sri Lanka .................................................................................................... 46 Figure 13: Government Bond’s Maturity Profile ................................................................................................ 46 Figure 14: Government Debt (% of GDP) ............................................................................................................ 48 Figure 15: Government’s Fiscal Deficit (% of GDP) ............................................................................................. 48 Figure 16: FDI Inflows (% of GDP) ....................................................................................................................... 49 Figure 17: Government Spending on Power Sector ........................................................................................... 49 Figure 18: Green Bond Structure ........................................................................................................................ 65 Figure 19: Power Sector Structure ...................................................................................................................... 69 Figure 20: Power demand evolution .................................................................................................................. 71 Figure 21: Sector wise power consumption ....................................................................................................... 71 Figure 21: Installed capacity evolution ............................................................................................................... 71 Figure 23: Power generation mix ........................................................................................................................ 72 Figure 24: Cost of power is higher than end user pricing ................................................................................... 72 Figure 25: Average cost of power from existing generation sources ................................................................. 73 Figure 25: Transmission and Distribution Licensees ........................................................................................... 73 Figure 27: Transmission Network Evolution ....................................................................................................... 75 Figure 28: Distribution Network Evolution ......................................................................................................... 76 Figure 28: CEB’s Transmission and Distribution Losses ...................................................................................... 76 Figure 30: Transmission Charge .......................................................................................................................... 80 Figure 31: Average Tariff by Indian State Distribution Companies (US Cents / kWh) ........................................ 80 Figure 32: CPC Facing Operational Losses due to Regulated Oil Pricing ............................................................. 85 Figure 33: LECO Distribution Losses .................................................................................................................... 86 Figure 34: LECO’s Profit Margins ........................................................................................................................ 87 Figure 35: IMF Program – Key Objectives ........................................................................................................... 94 Figure 35: Political Risk Insurance for Equity Investment ................................................................................. 109 Figure 37: PRG Arrangement ............................................................................................................................ 110 Figure 38: Liquidity PRG Agreement ................................................................................................................. 111 Figure 39: Bujagali Project Structure ................................................................................................................ 113 Figure 40: Kribi Project Structure...................................................................................................................... 113 iii List of Tables Table 1: NCRE Projects Implemented, by Technology (as of February 2017) .................................................... 15 Table 2: Financiers of Select NCRE Projects ........................................................................................................ 16 Table 3: CO2 Emissions