Climate Investment Opportunities in South Asia Sri Lanka Sri Lanka has come out of a 30-year civil war with a strong policy focus on reconstruction and growth and is transitioning towards an urban-based manufacturing and services-driven economy. The government has emphasized the need for sustainable, resilient development, launching a Vision for a Sustainability Era initiative as part of its Sri Lanka 2030 goals, which seeks to tailor the UN Sustainable Development Goals to local needs and constraints. Sri Lanka’s Nationally Determined Contribution (NDC) to the Paris Agreement comprises Transport four areas – mitigation; adaptation; loss and damage from infrastructure extreme weather events; and implementation. In addition, $326M the government introduced a “blue-green era” development strategy in 2016 to sustainably develop its marine resources and green its growth. Sri Lanka’s Vision 2025, which outlines Green Waste buildings the government’s plans for the economy to achieve upper- $3.5B $8.4B middle-income status, signals its intention to empower the Sri Lanka's private sector and attract domestic and foreign investment and climate-smart aims to establish economic corridors, meet the demand for investment potential urban housing, and improve the public transport system by (2018–2030) encouraging public private partnerships (PPPs). The government is implementing several reforms to encourage transparency and Urban $18B Renewable water energy competitiveness for private sector-driven growth. $2.7B $2.5B Agriculture $964M 1 IFC estimates a total climate-smart investment opportunity of $18 billion in Sri Lanka from 2018 to 2030: $ 2 . 5 B I L L I O N I N R E N E W A B L E E N E R G Y , reflecting the NDC targets for large-scale renewable energy installations as well as the country’s hydropower potential $ 3 2 6 M I L L I O N I N T R A N S P O R T I N F R A S T R U C T U R E , to catalyze a modal shift towards mass public transport $ 8 . 4 B I L L I O N I N G R E E N B U I L D I N G S , to meet the government’s policy objective of conservation and effective use of energy, as well as the country’s housing and commercial construction needs $ 2 . 7 B I L L I O N I N C L I M AT E - S M A R T U R B A N W A S T E W AT E R , to increase wastewater treatment to 64 percent and support the NDC prioritization of water and wastewater management $ 3 . 5 B I L L I O N I N M U N I C I PA L S O L I D W A S T E M A N A G E M E N T, in line with the NDC focus on solid waste management, bringing collection rates up to 80 percent $ 9 6 4 M I L L I O N I N C L I M AT E - S M A R T A G R I C U LT U R E , for investments in improving productivity, innovative technology, and resilient seed varieties as per government priorities 2 Climate Investment Opportunities: South Asia Priorities for Sri Lanka to Attract More Climate-Smart Investment The country’s fiscal challenges and ambitious energy, transport, and waste management infrastructure plans, provide many opportunities for the private sector to meet investment needs, especially in urban development, industrial parks, and PPPs for large-scale project implementation. Opportunities for private investment will widen as Sri Lanka pursues deeper global economic integration through export-oriented production. Finalizing and implementing a national PPP framework, with standardized procurement processes will build investor confidence. Policy reform will be required to attract private capital to help the water and sanitation sector rehabilitate, extend service coverage, and increase operational efficiency and cost recovery. Launching and enforcing the implementation of the proposed Green Building Code and Evaluation System, supplemented by policy targets will further boost investment in green construction. IFC Advisory and Investment Spotlights C O M M E RC I A L B A N K O F C E Y LO N P L C (2017) In August 2017 IFC extended its long-term partnership M A S C A P I TA L P R I VAT E L I M I T E D ( 2 0 1 4 ) with Sri Lanka’s Commercial Bank of Ceylon, committing In June 2014, IFC committed to providing a $28 million own- to a $100 million own-account senior loan to help the account investment in MAS Capital Private Limited, Sri Lanka’s bank increase its lending for renewable energy and largest export apparel manufacturer, to support the group’s energy-efficiency projects in the country. This is IFC’s expansion and innovation plans. MAS Capital is Sri Lanka’s largest financing from its own account in the country. largest private sector employer, with 42 facilities spread over Issued over seven years, this financing will help reduce 10 countries and a workforce exceeding 64,000. The group’s greenhouse-gas emissions, promote energy efficiency, operations span the entire value chain of the manufacturing and support the expansion of conventional and non- process to the final product. conventional renewable energy projects. The loan will also contribute between 7,500 and 23,250 new direct jobs, The project supports new investment for capacity expansions, while its projects will save an estimated 165,040 tons of sustainability projects, and product development, helping to greenhouse-gas emissions annually. Earlier in the year, improve the apparel sector’s compliance with environmental IFC extended its partnership with the bank through an standards and energy efficiency. The project will also create more advisory project to help develop its green finance business. employment opportunities for women in Sri Lanka. Sri Lanka 3 ARPICO (2016) In March 2016, IFC, with support from the government of Canada, committed to investing $15 million in the Sri Lankan retail chain Richard Pieris Distributors Limited. The company’s flagship brand, “Arpico” has been one of the most powerful local brands in Sri Lanka for more than 50 years, serving the community with a diverse range of products across many sectors such as manufacturing, plantations, financial services, exports, consumer goods, construction, logistics, educational services, and retail. IFC’s investment consists of a $7.5 million loan from IFC’s own account and a further $7.5 million from the IFC-Canada Climate Change Program. The project will help the company expand its modern retail network, support job creation, and develop local supply chains. The financing will also be used to install solar panels on company store rooftops. This investment will help create more than 800 direct new jobs and an even larger number of indirect jobs by 2020. It will also help the company adopt green building measures and promote climate-smart technologies. Rooftop solar photovoltaic installations funded through the project will help reduce greenhouse-gas emissions by 2,200 tons of carbon dioxide equivalent annually. This factsheet summarizes details from the Climate Investment Opportunities in South Asia report, which covers Bangladesh, Bhutan, 2121 Pennsylvania Ave., NW India, the Maldives, Nepal and Sri Lanka. http://wrld.bg/PgpC30gS88e Washington, D.C. 20433, USA www.ifc.org Sri Lanka 4