Putting up a coal power plant will cost US$ 300 million and will be constructed on a design, build and transfer basis.
A Chinese team is due next week to finalise the feasibility report and Premajayantha is upbeat the project could kick off before the year ends.
The balance funds will be split up to fund key highway projects including the Katunayake-Colombo-Ratmalana express rail network.
China's Exim & Import Bank will lend the funds with repayments fixed at two percent annual interest payable over a 20 year period (including a five-year grace period).
Sri Lanka's electricity demand grows at an annual average of nine percent and the Ceylon Electricity Board (CEB) n