The deal, nicknamed "RE8," was signed into contract during a ceremony attended by the Managing Director of SUNIR (Iran Power & Water Equipment and Services Export Company) Mohammad Parsa and Sri Lanka’s former Deputy Energy Minister Sagala Ratnayaka in Colombo in June 2009.
According to the agreement, SUNIR will construct six hundred 33-kilovolt (kV) electricity substations, and build a network consisting of 600 kilometers of 33-kV transmission lines, 3,000 kilometers of low voltage three-phase lines as well as 600 kilometers of single-phase lines.
The Export Development Bank of Iran will fund the project, and the Export Guarantee Fund of Iran will provide the insurance coverage for it.
According to a World Bank report released in April 2012, entitled ‘More and Better Jobs in South Asia’, electricity is the number one constraint for enterprises in Sri Lanka.
More significantly, electricity outranks other constraints in Sri Lanka and available figures indicate the severity of electricity-related issues for the commercial sector in the country.
Iran will boost its electricity generation capacity by 25GW to reach 73GW at the end of the 5th Economic Development Plan (2011-2015), according to Iranian Energy Minister Majid Namjou.
The country is currently exchanging electricity with neighboring Afghanistan, Armenia, Azerbaijan, Iraq, Pakistan, Turkmenistan and Turkey.
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