The Upper Kotmale hydropower station in the central hill country, which got underway in 2006, was funded by the Japan Bank for International Cooperartion with 38 billion Japanese Yen (approximately Rs 50.4 billion).
The project will add 150-MW of power to the national grid.
The state power entity Ceylon Electricity Board (CEB) has also invested Rs 8 billion in the project.
The country's dependency on costly thermal power to supplement hydro power pushed the cost of power generation up forcing the government to subsidise tariff.
This has caused the CEB to suffer massive operational losses.