Under the contract, ABB will construct new substations at Polpitiya in the Central Province and Padukka near the capital Colombo in the Western Province.
The company will also upgrade the existing substation at Pannipitiya, a suburb of Colombo.
The project is scheduled for completion in 2017.
ABB will be responsible for the designing, engineering, supplying and commissioning of the substations and will provide high-voltage air-insulated switchgear, medium-voltage indoor gas-insulated switchgear, power transformers, IEC 61850-compliant protection and substation automation, and fiber-optic communications systems, as part of the contract.
The government is planning to install additional power generation capacity of over 2,500MW and increase the renewable energy share in the national grid to about 20% by 2020.
ABB Power Systems division head Claudio Facchin said: "These substations will boost transmission capacity and address Sri Lanka’s growing demand for electricity.
"We are pleased to support the country in developing its power infrastructure, improving reliability of supplies and increasing energy efficiency."
