Sri Lanka To Purchase 75% Equipment from India For India-funded Projects

Recently, we reported that India extended a USD 100 million Line of Credit (LOC) to Sri Lanka for various solar energy projects. Now, for those solar projects, Sri Lanka will purchase the equipment and materials from India itself. That USD 100 million LOC is a 15-year loan of a fixed rate of 1.75% and that within 15 years, from  the Export & Import Bank of India. Sri Lanka has agreed to this financial help to boost their solar energy sector by ensuring the country’s 70 percent power requirements are fulfilled by renewable energy sources by 2030. The structure, including the provision to buy from Indian firms, is quite normal for arrangements of this sort.

The credit line is expected to be used up in the next three years. 85 percent of the total funding will be utilized for rooftop solar systems to be installed at the government buildings. A key policy of the government is to generate solar power by obtaining the contribution of state-owned buildings, places of worship, and houses of low-income families. Hence, the Lankan government is looking forward to a pilot-scale project of implementing floating solar in addition to providing solar panels to low-income families as well as religious places apart from the identified buildings.

Around 140-150 MW of solar power would be generated through these pilot projects. The Lankan government has identified the buildings and the solar project generation capacity, the completion of project study might get completed in the coming three months.

Additionally, several other steps will also be taken to provide facilities to store solar energy in batteries for the low-income families that are unable to access the national power grid, as per the statement.

“Sri Lanka is going green, and we are working extensively to make it happen. Today, we formalized the agreement on the Line of Credit worth USD 100M b/w Sri Lanka and the Export & Import Bank of India. Steadily, we’re getting closer to the goal of 70 percent renewable energy by 2030,” said Sri Lanka President Rajapaksa at the time of agreement on 16 June 2021.

The agreement was signed between the Sri Lankan government and the Export-Import Bank of India and exchanged by the High Commissioner of India to Sri Lanka Gopal Baglay and Secretary to the Treasury S R Attygalle in the presence of Sri Lankan President Gotabaya Rajapaksa.