Sri Lanka Faces Arbitration Case Over Cancellation of Wind-Solar Hybrid Power Project

The arbitration is initiated over the cancellation of $150 million wind-solar hybrid power project


KLS Energy Lanka, a subsidiary of Malaysian renewable energy producer, Energy Sdn Bhd has filed an arbitration against the Sri Lankan government.

The arbitration under BIT Malaysia – Sri Lanka 1982 was filed over the cancellation of a $150 million wind-solar hybrid power project by the Sri Lankan government.

The request for arbitration was accepted by the Acting Secretary-General of International Centre for Settlement of Investment Disputes (ICSID).

The Ministry of Power and Renewable Energy of Sri Lanka is the respondent in the case.

Earlier, the Ceylon Electricity Board (CEB) had approved the project to build the hybrid power project in Jaffna in 2008 and signed a 20-year power purchase agreement (PPA) with KLS Energy Lanka.

According to Colombo Gazette, Sri Lankan government has alleged that KLS Energy Lanka has not honored its investment commitment in the project and cancelled it in 2016.

Whereas KLS Energy Lanka has claimed that it had already invested $22 million and blamed the government for delays.

Recently, Mercom reported that Ceylon Electricity Board (CEB), Sri Lanka will receive ₹2,529 million (~$34.41 million) from the French Agency for Development (AFD). This will be utilized by CEB to implement Tranche II of the green power development and energy efficiency improvement investment program.

Ceylon Electricity Board has an ambitious capital investment plan for the next 10 years to maintain 100 percent electrification, while improving supply quality and reliability.

Earlier, the Ministry of Finance and Mass Media in Sri Lanka announced that it has entered into an agreement with the Asian Development Bank (ADB) wherein the bank will loan the country $50 million to help develop rooftop solar projects.

In June 2018, Japanese Sri Lanka Friendship (JSF) Corporation, a board of investment company, announced to start manufacturing solar panels at Katunayake in Sri Lanka.

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Nitin is a staff reporter at and writes on renewable energy and related sectors. Prior to Mercom, Nitin has worked for CNN IBN, India News, Agricultural Spectrum and Bureaucracy Today. He received his bachelor’s degree in Journalism & Communication from Manipal Institute of Communication at Manipal University and Master’s degree in International Relations from Jindal School of International Affairs. More articles from Nitin Kabeer