An agreement between Sri Lanka's Board of Investment and the Kosgulana Hydro Company Ltd. will allow for the construction of a new 1.5 MW micro hydropower plant.
The US$3.63 million project will be located near Kosgulana along the Kukule Ganga River.
Kasgulana Hydro Company is chaired by Japanese renewable energy developer Watanabe Satoru, who said his decision was inspired in large part by Sri Lankan president Mahinda Rajapakse's recent visit to Japan.
Satoru also told sources his gratitude toward Sri Lanka for its assistance following Japan's 2009 tsunamis.
Work on the small hydropower plant is expected to begin soon, with power being fed into the country's national grid.
The investment reflects the Sri Lankan government's ongoing efforts to reduce the country's dependence on imported fuel by cultivating its domestic hydroelectric power resources.
HydroWorld.com reported in January that the Asian Development Bank had extended $1.29 in credit to Sri Lanka's National Development Bank to rehabilitate and repair 19 small hydro projects.
Japanese investors also assisted Sri Lanka in completing the 150-MW Upper Kotmale hydropower project, which was inaugurated in July 2012.
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