Loan conditions included infusing financial discipline and dividing the loss making state utility into independent units of generation, distribution and transmission.
CEB unions have rejected the reform package saying it sets the trend for debt-ridden power utility's privatization.
The government was also trying to push ahead with legislations to implement reforms, but caved in recently after the unions threatened all out supply disruptions if the laws are presented in parliament.
"ADB and the Sri Lankan government agreed ¦. to forego the second tranche loan under the Power Sector Reform Program," the bank said Wednesday following meetings between its South Asia Dept. Director General Kunio Senga and top Sri Lankan officials including treasury secretary P B Jayasundara.
The bank reiterated that debt-ridden CEB needs institutional reforms and fin