In a significant step toward advancing Sri Lanka’s energy transition, the International Finance Corporation (IFC) is poised to extend a US $ 30 million loan to support the government-backed Secure, Bearable and Sustainable Energy Project (SBSE) under the umbrella of the World Bank Group. This move follows formal approval by the country’s Cabinet of Ministers of Sri Lanka, which endorsed the loan agreement earlier in May.
According to the Cabinet spokesman, Dr. Nalinda Jayatissa, negotiations with the IFC are ongoing to finalise the exact terms. The funds will be channelled via the Ceylon Electricity Board (CEB) or its designated affiliates, functioning as sub-loans to implement the project’s core components: enhancing system reliability, improving affordability of power, and accelerating the shift to sustainable energy generation. Importantly, the agreement will adhere to recommendations of the Public Debt Management Office to safeguard debt-management standards.
In broader context, this loan dovetails with the Bank Group’s new programme unveiled in June 2025, under which some US $150 million has been committed to strengthen Sri Lanka’s clean energy mix. That programme intends to add about 1 gigawatt of renewable (solar + wind) capacity and mobilise more than US $800 million of private-sector investment.
Beyond the headline loan, the IFC has been active in Sri Lanka’s financial and climate-finance reform space. For example, earlier in 2024-25 it supported the Central Bank of Sri Lanka in developing its green-finance strategy a move aimed at boosting bank-lending to renewable projects and SME access to finance.
Although precise nine-month figures specific to the SBSE project are not publicly available yet, the IFC’s institutional data shows that for its FY 2025 (ending June 30) total commitments rose to US $71.7 billion globally up from US $56.1 billion a year earlier.
While these numbers cover all IFC operations worldwide—not just Sri Lanka they reflect the scale at which the IFC is operating and the potential for significant deployment of funds into the country.
For Sri Lanka, the anticipated impact of the US $ 30 million loan is multiple. First, by improving power-system reliability and reducing dependence on costly fossil-fuel imports, it can help lower electricity cost burdens on households and businesses.
Second, aligning with the country’s goal of 70 % renewables by 2030, the loan is a catalyst for private-sector entry and innovation in the energy space. Third, by adhering to debt-management frameworks, the loan contributes to restoring fiscal stability and external-funding discipline.
It is, however, crucial to recognise risks: the success of the SBSE project will depend not only on funding but on execution the pace of generation-capacity roll-out, transmission upgrades, grid integration, and regulatory reform. The loan’s value lies not only in the US $ 30 million itself, but in the credible pathway it opens for larger private investment and institutional reform.
In summary, the IFC’s forthcoming loan marks a pivotal moment for Sri Lanka’s energy sector: through targeted funding, reform-linked technical support and private-sector mobilization it offers a tangible boost to cleaner, more sustainable and affordable power.
The coming months will be critical as the project transitions from approval into implementation and as stakeholders monitor whether the promised gains translate into measurable improvements for the Sri Lankan economy and its people.
